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Updated on Wednesday, June 26, 2019
If you’re an investing novice, learning how to put money in the markets can seem overwhelming. There are countless online services at your disposal, which can make it challenging to pick the right one and get started.
Not sure where to begin? Let’s take a closer look at the best online brokers and the best robo-advisors. Both product categories offer low fees, lots of flexibility and functionality that simplifies the investing process. Either can make it simple to take your first steps in the world of investing. If you want a more specialized approach consider a financial advisor.
Deciding whether you need a robo-advisor or an online broker is straightforward. If you prefer to actively manage your investments, an online broker is what you’re looking for. A broker’s job is to help you buy and sell securities, and many brokers offer educational and research resources to help beginners learn. Below we’ve included our top online brokers for beginners.
If you prefer a more hands-off approach to your investments, go with a robo-advisor. These automated investing services put your money into diversified portfolios of stocks and bonds that are customized to your needs. Best of all, they charge low annual fees. Since computer algorithms do the hard work, you’re freed from actively managing your investments. See below for our top robo-advisors for beginning investors.
How we chose the best investment platforms for beginners
We regularly review the landscape of investment services. For this review, we began with a selection of brokers and robo-advisors that represent the best in the industry. For the brokers, we evaluated 20 different services in our latest round; for the robo-advisors, we evaluated 19 different services. We then distilled each list down to the top four choices. All of the brokers and robo-advisors listed below are worth considering, with those at the top of each category scoring best.
The things we weighed most heavily when ranking the best online brokers were trading fees, account minimums, the diversity of investment products offered (stocks, bonds, exchange-traded funds or ETFs, and mutual funds), and low account fees (annual fees, transfer fees, and inactivity fees). To determine our list of the best robo-advisors, we focused on management fees and account minimums, and also considered ease of use and customer support.
See our methodology article for a more detailed explanation of how we create our rankings.
The best robo-advisors for beginners
Annual Management Fee
Average Expense Ratio (moderate risk portfolio)
Account Minimum to Start
Charles Schwab Intelligent Portfolios
|0.25% (up to $100,000); 0.40% ($100,000.01 or more)|
SoFi Automated Investing
Wealthfront: Low fees, high cash management APY
Wealthfront is one of the most visible names in the robo-advisor space, and its low annual cost and free financial planning tools make it a great fit for beginners. The $500 minimum deposit to open an account is higher than peers, many of whom have no minimum. If you would like to fund your account but also want to keep some money on the sidelines, Wealthfront offers a cash management account with an attractive 0.10% APY. Wealthfront intentionally offers very little opportunity for human interaction on its platform. This keeps fees low, but could be a drawback for those who want personalized attention or who have complicated tax situations.
- $500 minimum to start investing is beginner-friendly
- Low fees: 0.25% management fee; 0.09% avg ETF expense ratio
- 20 portfolios available to fit a variety of investing goals, from conservative to aggressive
Charles Schwab Intelligent Portfolios: Backed by a major brokerage
Charles Schwab Intelligent Portfolios is a great choice if you’d like to start with automated investing but anticipate becoming more actively involved in managing your investments over time. Note that Intelligent Portfolios requires a relatively steep $5,000 minimum deposit to start investing. Also, do not be misled by the 0% management fee, as it’s not the only cost involved using this robo-advisor.
Intelligent Portfolios requires users to hold 6% to 30% of deposited funds in a cash management account that offers a 0.67% APY. This requirement will eat into overall returns in years where the market returns above 0.67%. And this is on top of an average 0.14% expense ratio for a moderate-risk portfolio.
That said, this robo-advisor has an exceptionally detailed description of their ETF selection methodology. Intelligent Portfolios users also get access to Charles Schwab’s 365 U.S. branch locations, where you can talk to advisors and handle administrative tasks in person.
Charles Schwab Intelligent Portfolios Highlights:
- Schwab offers many additional account types and services for investors looking to expand beyond robo-advising down the road
- 0% management fee, though you do need to hold a portion of your portfolio in cash and an avg 0.14% expense ratio still applies
- Over 365 physical branch locations for in-person assistance
Betterment: Great choice for smaller balances
Betterment is another good choice for beginner investors, offering strong features at low cost, with no minimum deposit. Their step-by-step account creation process translates your financial goals into investment recommendations, helping to ensure that your portfolio fits your objectives. The annual management fee for accounts under $100,000 is 0.25%, plus an average 0.11% expense ratio, which is in line with peers. Unfortunately, accounts over $100,000 will see the annual management fee jump to 0.40% — so if you are managing more than $100,000, you may want to consider a different robo-advisor.
- $0 minimum to open an account makes it easy
- Low 0.25% management fee for account balances under $100,000 plus low 0.11% avg ETF expense ratio
- Premium features available for account balances greater than $100,000, including unlimited access to Betterment’s financial advisors
SoFi Automated Investing: Low costs, great perks
SoFi Automated Investing aims to minimize fees and eliminate investing friction points, and they succeed at both. The firm’s 0% management fee and ultra-low 0.08% average expense ratio makes it one of the most competitively-priced robo-advisors in the market. Beginners will find the free access to SoFi financial advisors as an especially valuable perk. Others include free career counseling and discounts on loans.
The main downside with Automated Investing is that SoFi’s portfolios are less customizable than those of competing services. It offers only five risk levels to choose from, as opposed to at least 10 available with other services. SoFi does not offer tax loss harvesting.
SoFi Automated Investing Highlights:
- Rock-bottom fees: 0% management fee, plus 0.08% avg expense ratio
- Free access to financial advisors
- SoFi also offers brokerage accounts for investors looking to trade individual stocks or ETFs
Best online brokers for beginners
Fee per trade
No-transaction-fee Mutual Funds
Charles Schwab: Full-featured offering
Charles Schwab can support your investing journey from your first steps as a novice through to advanced trading strategies. Schwab has no account minimum, charges only $0.00 per trade in commissions, and allows you to trade many products commission free. Accounts come equipped with a suite of tools to help you construct your portfolio and pick the correct mutual funds, ETFs and stocks. Schwab also offers 24/7 phone support and has over 350 branches if you need in-person help.
Charles Schwab Highlights:
- Affordable trading with $0.00 per trade commissions and no minimum deposit to open an account
- More than 500 commission-free ETFs and over 3,000 no-transaction-fee mutual funds
- Robust research tools for beginners include analyst reports and screeners for stocks, bonds, mutual funds and ETFs
Fidelity: Strong mutual funds options
Fidelity is well known for its retirement offerings and has a lot to offer beginners. Their $0 minimum to open an account, low $0.00 per trade commission and excellent selection of commission-free ETFs and mutual funds make this service a great choice for new investors. Beginners looking to learn about investing will appreciate Fidelity’s stock screening tools, library of analyst reports and portfolio selection tools. Fidelity also offers clients exclusive access to several proprietary mutual funds that have no transaction fees and 0.00% expense ratios.
Fidelity offers strong customer support with representatives available by phone 24/7 and at over 190 branch locations if you need in-person help. Some reviews on their site suggest that response times can lag for support though. Low fees, no minimum to start and a large menu of investments to choose from make Fidelity a compelling option for beginners.
- $0 minimum to open an account and no fees on account transfers
- Tons of low-fee options: Over 500 commission-free ETFs and more than 3,600 no-transaction fee mutual funds
- Stock screening tools, analyst reports, and portfolio selection tools will be helpful for beginners
TD Ameritrade: Broad offering of investments
TD Ameritrade’s long-standing commitment to helping clients access financial markets make it a strong choice for beginners. TD Ameritrade offers a wide assortment of commission-free mutual funds and ETFs, helpful customer service and educational tools. Beginners starting with stocks and bonds will appreciate TD Ameritrade’s analyst reports, charting tools and watch lists. Another upshot is that there is no minimum deposit required to open an account.
TD Ameritrade’s high $0.00 per trade commission is a drawback, though beginners are unlikely to be placing enough trades for this to have a large impact. With 24/7 phone support and branches spread across the country for in-person help TD Ameritrade is solid broker choice for beginners.
TD Ameritrade Highlights:
- Keep fees low with nearly 4,000 no-transaction-fee mutual funds and over 550 commission-free ETFs
- $0 minimum to open an account
- Current TD Bank account holders may qualify for special promotions based on amount deposited including free trades and account rebates
E-Trade: Good research options
E-Trade is a well-known online broker and offers a wide assortment of available investments for beginners. The $No account minimums minimum to open an account and high $0.00 trading fees could deter folks with a small amount to invest, though. E-Trade’s breadth of no-commission ETFs and mutual funds offers a wealth of choices for first-time investors step into the market. E-Trade’s mobile tools stand out for dynamic charting and easy access to research materials. For investors seeking to automate a portion of their portfolio E-Trade also offers their Core Portfolios robo-advisor product for a 0.30% management fee.
- Respectable selection of low-fee options with over 250 commission-free ETFs and more than 4,000 no-transaction-fee mutual funds
- Mobile tools feature beginner-friendly charting, research, and trading
- E-Trade’s robo-advisor, E-Trade Core Portfolios, is available for users who’d like to automate a portion of their portfolio
FAQs about online brokers
A robo-advisor is an automated service that selects investments for you utilizing sophisticated computer algorithms. Robo-advisors help investors take advantage of the best parts of wealth advising — like diversification and asset allocation — without incurring the cost of hiring a human advisor to manage your accounts.
Most robo-advisors begin the investing process by asking you a series of questions about your assets, investing history and investing goals to help establish the right balance in your investment portfolio. Then the robo-advisor automatically manages your money and sets you on the path to achieve your financial objectives.
When considering which robo-advisor to choose, you should evaluate several different things:
- Minimum Balance: The minimum amount you need to invest can help you narrow the field of robo-advisors. A number of newer robo-advisors have no minimum to start, while the ones offered by the traditional large brokerage houses will typically require an initial deposit of several thousand dollars.
- Fees: Even small fees can add up to thousands of dollars of lost returns over time. The top-rated robo-advisors in our ranking typically charge a flat yearly management fee of 0.00% to 0.50% of your deposited balance. In addition to the management fee, robo-advisors also charge investors an expense ratio to cover fees that ETF companies charge for the funds that make up your portfolio. Average expense ratios typically range from 0.08% to 0.15%.
- Ease of use: When you create your account, ask yourself: Do I understand what the robo-advisor is telling me? Can I easily figure out how to deposit and withdraw money? Do their planning tools help me understand how much I need to invest and when? If the answer is no to any of these, you might be better off going with another option.
Online brokers help you purchase and trade investments on your own, without the need for an advisor or investment manager. Online brokers put you in the driver’s seat. Instead of relying on a particular firm’s recommendations, you can select the stocks, mutual funds and bonds that work best for you. Online trading is also convenient; you can manage your assets from anywhere, without having to wait on anyone else. Even better, online brokerage accounts tend to be more cost-effective than traditional brokerage accounts because they often have fewer fees.
Keep in mind that the earlier you get started with investing in markets, the more your money can grow. Even if you have only a small amount to invest, investing with an online broker can help you lay a strong foundation to build wealth. Start with what you can afford and contribute regularly to begin boosting your returns. Before you start investing, be sure that you’ve paid down high-interest debt and saved enough money for an emergency fund. This will ensure that you can avoid potential losses from having to withdraw your investments early in case of big, sudden expenses.
While there’s always risk with investing, online brokerages are typically quite safe. Most brokerage sites will have a section on their website that details their security measures. Your accounts are also often protected by the Securities Investor Protection Corporation (SIPC), which helps safeguard you against the loss of your investments if the brokerage closes.
When shopping for an online broker, there are a few factors to keep in mind before making a decision:
- Fees: While you can’t control the returns on your investments, you can control what you pay in fees. Look for an online brokerage that offers low trading fees; some even offer free trades on select investments or if you meet certain account usage criteria.
- Investment advisory services: While online brokerage companies give you flexibility, it can be helpful to check in with a professional once in a while. Some give you the option to connect with an investment advisor to help you stay on track.
- Research tools: Access to research tools can help you choose the right investments. Look for an online broker that offers research tools to help you analyze and choose investments based on past performance and professional recommendations.
- Investment mix: You want to be able to invest in a wide range of investments, including stocks, mutual funds, exchange-traded funds (ETFs) and bonds.
- Customer service: Customer service can be key, especially if you have trouble with your account. You want an online broker with easy-to-use customer service tools so you can get the help you need quickly.
Many online brokers allow you to invest in a wide range of investments, including stocks, bonds, mutual funds and ETFs. Online brokerage accounts offer you a great deal of flexibility, so you can invest in what makes sense for you.
To begin investing and trading online, you have to open an account with an online brokerage firm. To do so, click on the company’s website and select “open an account” or “apply now.” The site will prompt you to enter your personal information, such as your name, address, employment details, Social Security number and proof of identity. Next, you’ll be asked to enter your bank details so you can make an initial investment and set up recurring deposits if desired. Verifying your account can take a few days, but then your account will be in effect and you can begin investing your money.
About our ranking
Please see the full lists below of brokers and robo-advisors that we considered for this ranking.
All brokers considered:
J.P. Morgan You Invest
T. Rowe Price
All robo-advisors considered:
Ally Invest Managed Portfolios
Charles Schwab Intelligent Portfolios
E*TRADE Core Portfolios
Merrill Guided Investing
SoFi Automated Investing
Vanguard Personal Advisor Services
The “Find a Financial Advisor” links contained in this article will direct you to webpages devoted to MagnifyMoney Advisor (“MMA”). After completing a brief questionnaire, you will be matched with certain financial advisers who participate in MMA’s referral program, which may or may not include the investment advisers discussed.