Best Brokerage Accounts for Beginners 2021

Published date: December 14, 2019 | 12:30 PM

What’s the one thing that an investment brokerage firm must have before you can consider depositing funds with them? Is it low management and transaction fees? The depth of their investment options? Is it their trading platforms, research training or quality of their customer service or financial assistance?

Whatever the case, identifying a reputable and reliable broker with all of these features can be a daunting task, especially when every industry player here claims to be the best. But don’t fret yet!

We have taken time to vet different brokerage houses in an attempt to identify one that best matches your investment needs. Here are our top picks for the best brokerage firms for 2021. But first, we look at why you need to engage one and the criteria we used in arriving at this conclusion.

Top Brokerage Accounts of 2021

You can read about the best brokerage accounts in more detail further down this page, but if you’re in a rush, here’s a quick look of the top accounts of 2021.

Edward Jones
Charles Schwab
TD Ameritrade
Ally Invest
Betterment
M1 Finance
Interactive Brokers

In This Guide

Brokerage Accounts – Why do you need them?

Helps build a portfolio: Most brokerage houses have been in existence for ages and are operated by equally experienced investment managers. Who then is better equipped to help you find the right balance for different investments making up your portfolio?
When and how to invest: Brokerage firms offer more than just a platform that gains you access to the market. They give you all the tools necessary to help you determine the best time to buy or dispose of an investment.
Prompt portfolio management: Don’t know-how, or just don’t have enough time, to handle your investment portfolio? The brokerage firm will provide an automated managing tool or a financial advisor that you can trust to profitably manage the portfolio.
Facilitate buy and selling particular shares: An investment broker also presents you with less stressful access to multiple exchange markets.
Vet legitimacy of investments: The fact that a broker lists a particular investment on their platform is indication enough that they have full confidence in its legitimacy. They save you an enormous amount of time and resources that otherwise would have been spent vetting the legitimacy of every company and instrument you are interested in.

Pros and cons of Brokerage Accounts:

Pros

Provide valuable investment advice and actionable market research
Give access to premium analytical tools that ease your investment decision making
Some give you an opportunity to highly customize your investment options
Others like discount and robo advisers expose you to low costs
Real-time access to your investment information in the form of financial statements

Cons

Most, like the discount and robo advisors, have a lot of hidden costs
Full-service brokerage is relatively expensive
They don’t always have your best interests at heart given that they still make money whether you profit or report a loss

What Criteria is used to Rank these Brokerage Accounts?

In reviewing top investment brokers and deciding who features on the list of what we consider the best in the industry today, we took into account such factors as:

Fees and commissions
User-friendliness and customer support
Research and analytics tools
Number of investment options
Trading platforms
Offers and promotions
Number of markets accessed by the trader

Best 7 Brokerage Accounts 2021:

1. Edward Jones

Edward Jones remains one of the best full-service brokers with specially designed financial advisory services that target both individual investors and small businesses.

The broker also has one of the largest branch networks in North America and an equally large number of expert financial advisors that work on a one-on-one basis with their clients.

And while the rest of the world is busy getting online, Edward Jones still maintains financial advisors in all their branches to offer face to face services to their ever-growing pool of clientele.

Investment process

A typical investment process starts with a sit down with the expert investor. Together, you get to explore your investment goals by evaluating such factors as your tolerance and time limit.

The expert will then walk you through the different investment vehicles including mutual funds, individual stocks, and fixed income securities like bonds from whence you decide the right percentage of each or some to feature on your investment portfolio.

Fees and minimum deposit

Edward Jones allows for the opening of taxable accounts, IRAs, 401(k), and multiple types of other investment accounts.

The investment broker doesn’t demand a specific initial deposit amounts safe for the Guided Solutions Account that requires a $5,000 minimum deposit. Charges here start at 1.35% per annum on a sliding scale while retirement accounts attract a $40 yearly fee.

Pros:

A huge number of physical branches
Professional management makes it a passive investment opportunity
Competitive fees for huge account balances – 0.5%/yr for accounts with $10 million

Cons:

Punitive fees for small accounts holders
Not suitable for day trading

Visit EdwardJones

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2. Charles Schwab

Are you rather confident about your investment analysis skills and decision making?

Consider investing through the largely acclaimed Charles Schwab full-service investment broker. The investor offers a full range of investment services that range from an online investment platform to investment advisory services.

The broker is also famed for its lower-than-industry average fees, a wide range of investment options, and the integration of numerous high tech services on its platform.

Beginner-friendly

We particularly appreciate the broker’s level of dedication towards customer support.

This, together with the user-friendly online investor platform, has played a key role in making the broker one of the most preferred brokers for both the beginners and experienced investors.

The broker services are also easily accessible through their web trader and mobile apps. Most of the accounts opened with Charles Schwab do not require a minimum deposit.

Stock and ETF trading here attracts a $4.95 charge per transaction, while options charges stand at $4.95 plus $0.65 per contract. The Charles Schwab ETFs, however, are commission-free.

Pros:

Highly dedicated customer support
No minimum deposit
Liquidity backing from one of the biggest banks

Cons:

Limited investment options – no forex

Visit Charles Schwab

3. TD Ameritrade

TD Ameritrade may quite easily pass as the most beginner-friendly online broker we have interacted with so far if the levels of customer support, availability of multiple trading platforms, and investor training are anything to go by.

These range from their web trader to their innovative Thinkorswim that allows for social trading to the equally versatile web and mobile traders.

Some of the most unique characteristics of the trader are the fact that you don’t need a prescribed minimum deposit to open an investment account with them.

Innovative Thinkorswim

You also don’t need special qualifications to gain access to their social trading Thinkorswim platform where the veteran and novice investors meet and share ideas, opinions, and investment strategies.

Beginner investors, therefore, have a great opportunity to learn not just from the educational investment material availed on the broker’s website but from learning at the feet of pro investors.

Fees

Most investment accounts opened with the trader have access to both the exchange-traded stocks and fixed interest securities like treasury bonds.

Stocks and ETF trades at Charles Schwab attract a $6.96 charge per transaction while the options attract an additional $0.75 per contract. Opening a new account and funding it with a qualifying deposit nonetheless earns you 60 days of commission-free trades.

Pros:

Wide range of investments to choose from
Proper investments in market research
No account minimums
Innovative and highly versatile trading platforms

Cons:

One might consider their trading fees expensive
Broker assistance and expert help is expensive here

Visit TD Ameritrade

4. Ally Invest (Trade King)

Ally Invest, formerly Trade King, carries the day as the best broker for active traders given its low trading costs. Wide array at premium analytical tools and user-friendly trading platforms.

Trading fees start from $4.95 per transaction with options attracting an extra $0.65 charge per contract. You are also free to open as many accounts with the broker as possible given that they don’t require account minimums.

Plus high volume traders and high net worth clients get a $1 volume discount that effectively lowers their cost of trade to $3.95 per transaction.

To get here, however, you must maintain an active daily account balance of $100,000 or trade more than 30 trades per quarter.

Research tools and trading platform

Ally Invest has a host of free-market analyses tools for both the stock/ETFs traders as well as technical traders.

This starts with access to real-time market buy-sell quotes for traders who make more than ten trades a month, options pricing calculator for options traders and probability as well as profit and loss calculators for the technical traders.

Either of these traders can access the system through their web-based platforms and on the move through their mobile apps and smartphones that have access to the web trader.

Pros:

Low commissions and trading fees
No account minimums
Highly customizable web-trader
Wide range of research and analytic tools

Cons:

Purely online with no physical branches
Mutual funds are not trading fee exempt

Visit Ally Invest

5. Betterment

What happens when you don’t have an idea on how to go about the business of establishing a solid investment portfolio and not enough funds to secure the services of a full-service broker?

You get to engage the best robo advisor, Betterment. The online investment broker is fully automated and uses the Modern Portfolio Theory (MPT) technology to help you create a balanced and profitable investment portfolio.

It starts by asking a series of questions in relation to risk tolerance to understand your investment goals before deciding on the type of investments to pool together in coming up with your portfolio.

If you don’t feel satisfied with the automated system, you can request the services of a human investment portfolio analyzer, but this will cost you.

Price

You can open different accounts relating to retirement and personal financial planning with the robo advisor given that they all don’t require a minimum deposit amount. Charges here start at 0.25% of the assets under management per annum.

Pros:

Fully passive investment option
Beginner-friendly
Provides for automatic rebalancing and tax loss harvesting

Cons:

Rigid investment portfolios
Access to expert help is quite expensive and also demands huge account balances

Visit Betterment

6. M1 Finance

If you like the idea of depositing your finances with an investment broker that doesn’t charge management or require insane amounts in minimum deposits, you will probably love M1 Finance.

This robo advisor is arguably the best when is it comes to low cost and highly customized investment options, making it a favorite for both the novice and experienced investors.

Like Betterment, the advisor’s automated systems use the MPT strategy in helping you create a feasible investment portfolio that best aligns with your investment goals.

M1 Finance also goes the extra mile and avails some pre-built investment portfolios that they can either adopt wholly or customize to meet their desired needs.

Passive investing and customization

M1 Finance robo advisor brings you as close to passive investing as you can ever get with their automated investment portfolio set up and management systems.

The advisor also has what we consider the most versatile robo advisor system that supports the highest levels of investment portfolio customization.

And we only wish they had more investment options in addition to the range of ETFs they currently provide.

Pros:

You can get cash advances of up to 35% your equity balance to sort your emergencies
Zero transaction fees
Highly customizable investment options
Availability of preset investment portfolios

Cons:

A limited number of investment options
Not suitable for active traders

Visit M1 Finance

7. Interactive Brokers

We consider Interactive brokers kings of investment diversification given the wide array of investment vehicles they grant their clients.

The investment broker has one of the most extensive collections of sophisticated analysis tools we have come across and is specially designed to address the needs of the high volume investors.

Versatile platforms and robo-advisor

They have connected their systems to virtually every electronic exchange across the globe, effectively exposing their traders to the widest selection of globally traded ETFs, equities, options, and futures.

They also have equally versatile trading platforms that range from web traders and mobile apps. Most recently, the broker launched its own version of robo advisor that allows you to access the global market around the clock.

Fees and deposit

Even with the expansive list of accounts that you can open and maintain with the broker, it still doesn’t demand a minimum deposit.

The broker’s transaction charges are also quite attractive and start from $0.005 per share. In addition to all this, they recently launched a robo advisor and this pushes them ever closer towards being the most user beginner-friendly investment broker.

Pros:

Quality and highly innovative trading platforms
A wide selection of technical analyses tools
A huge number of investment options to choose from
Low commissions

Cons:

Maintains inactivity fees for dormant accounts
Little emphasis on investor education and training

Visit Interactive Brokers

Bottom line

Depositing all your earnings in a savings account with a national bank account that won’t pay 2% as interest is inexcusable, (unless it is an emergency fund).

You also don’t have a valid reason why you are still investing with a broker that doesn’t understand or meet your investment goals.

Take the first and decide the type off investment account you want to open, and this guide will help direct you to the right broker.

And even when you don’t have a clear investment plan, we believe the robo-advisors or a sit down with a financial expert will help get your financial compass in order.

FAQs

Who is an investment broker?

Must I make my investment through a broker?

How much do I need to kickstart an investment journey?

What if I need the invested monies back before the maturity of the investment?

Are these investment brokerage firms regulated?

Can my investment broker direct funds to international markets?

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Edith Muthoni

Edith is an investment writer, trader, and personal finance coach specializing in investments advice around the fintech niche. Her fields of expertise include stocks, commodities, forex, indices, bonds, and cryptocurrency investments. She holds a Masters degree in Economics with years of experience as a banker-cum-investment analyst. She is currently the chief editor, learnbonds.com where she specializes in spotting investment opportunities in the emerging financial technology scene and coming up with practical strategies for their exploitation. She also helps her clients identify and take advantage of investment opportunities in the disruptive Fintech world.

View all posts by Edith Muthoni