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Stash vs. Acorns: Which Robo-Advisor Is Best for You?

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Stash and Acorns are both great robo-advisor options for entry-level investors. Both apps offer just enough functionality for someone without a lot of cash to put away and who might need simplified investment options and a little guidance. They allow beginners to get into the game with a small opening deposit, and both offer straightforward fee structures and some financial education.That said, Stash and Acorns aren’t identical, and they differ greatly in the range of investment options available. The best robo-advisor choice depends on your needs and personal preferences. Let’s figure out whether Stash or Acorns fits your needs.

Stash vs. Acorns: Feature comparison

Stash works like a traditional investment account, helping you to build a portfolio of exchange-traded funds and individual stocks. The app asks new users a series of questions to gauge their financial situation, financial goals and risk tolerance, then suggests stocks and ETFs that meet their needs. You get to choose which ETFs and stocks to include in your portfolio, and the app’s Stash Coach feature guides your choices.

Portfolio overview screenshots for Stash and Acorns

Acorns takes a hybrid approach that combines automatic savings with investing, and the process is much more hands-off than with Stash. You begin by linking your checking account and credit cards with the Acorns app, which then tracks your spending and rounds up all purchases to the nearest dollar, placing the difference into your account. Once you have at least $5 saved, it automatically invests in ETFs. In addition to this round-up function, you can also schedule recurring deposits as small as $5 into your Acorns account on a daily, weekly or monthly basis.

Both Acorns and Stash let users put money into various tax-deferred individual retirement accounts (IRAs), in addition to their basic taxable investment accounts. Acorns also offers a checking account, called Acorns Spend. It features unlimited free or reimbursed ATM withdrawals nationwide, free ACH transfers, direct deposit, and mobile check deposits.

StashAcorns
Management fee
  • $1 per month for accounts with less than $5,000 deposited
  • 0.25% % annual fee for accounts with $5,000 or more deposited
  • $2 per month for retirement accounts, or 0.25% annual fee for retirement accounts with $10,000 or more deposited
  • $1/month for basic Acorns functionality
  • $2/month for basic Acorns + IRA account
  • $3/month for basic Acorns + IRA account + Acorns checking account
Average ETF expense ratio0.29%0.03% – 0.15%
Account minimum$5$0, although your Round-Ups or one-time investments must be at least $5
Human advisorsAccess to customer service via phone and emailCustomer service via email only
Fractional sharesYesYes
Tax loss harvesting
College savings optionsYesNo
Investment account types
  • Individual taxable
  • Traditional IRA
  • Roth IRA
  • UGMA/UTMA
  • Individual taxable
  • Traditional IRA
  • Roth IRA
  • SEP IRA
Savings account optionNoNo
Ease of use
 
 

Stash vs. Acorns: Management fees

As management fees go, the structure for both companies is pretty simple, however Stash gets more expensive as your balance grows, while Acorns fixed cost becomes less expensive as your balance grows. Both Stash and Acorns charge $1 a month for basic services. Once you’ve built up an account balance of $5,000 or more with Stash, the management fee switches to 0.25% of your total account balance.

Both robo-advisors charge extra fees for additional features. Adding IRA retirement accounts costs you $2 a month with Stash, or 0.25% of the retirement account balance once it’s above $10,000. Acorns charges $2 a month for it’s basic service plus IRA accounts. If you add the Acorn Spend checking account, Acorns charges $3 a month

Here’s how total management fees compare for different balances utilizing only the basic taxable-account investing component of each app:

Account BalanceAnnual Cost for StashAnnual Cost for Acorns
$500

$12 or 2.4%

$12 or 2.4%

$1,000

$12 or 1.2%

$12 or 1.2%

$5,000

$12.50 or 0.25%

$12 or 0.24%

$10,000

$25 or 0.25%

$12 or 0.12%

$25,000

$62.50 or 0.25%

$12 or 0.05%

$50,000

$125 or 0.25%

$12 or 0.02%

And here’s how those fees compare if you opened a retirement account at Stash or used all three of Acorns’ offerings (investing account, retirement account, and checking account):

Account BalanceAnnual Cost of Retirement Account Only at StashAnnual Cost for Investing and Retirement Account at AcornsAnnual Cost for Investing, Retirement and Checking Account at Acorns
$500$24 or 4.8%$24 or 4.8%$36 or 7.2%
$1,000$24 or 2.4%$24 or 2.4%$36 or 3.6%
$5,000$24 or 0.48%$24 or 0.48%$36 or 0.72%
$10,000$25 or 0.25%$24 or 0.24%$36 or 0.36%
$25,000$62.50 or 0.25%$24 or 0.10%$36 or 0.14%
$50,000$125 or 0.25%$24 or 0.05%$36 or 0.07%

Management fees aren’t the only expense. Investments have their own expense ratios — the amount charged by third party companies to manage ETFs in which the apps invest your money. Although Stash offers a number of stocks and low-cost ETFs, the average ETF expense ratio is 0.29%, which is a little high for the category. Acorns, on the other hand, offers ETFs expense ratios that range from 0.03% to 0.15%.

Stash vs. Acorns: Special features

Both of these robo-advisors offer solid features and low startup requirements. For tax-deferred retirement accounts, both Stash and Acorns offer traditional IRAs and Roth IRAs. Acorns has the advantage of offering an SEP IRA for the self-employed, which Stash doesn’t offer. Stash, on the other hand, offers custodial UTMA and UGMA accounts for college savings, but parents looking for a 529 account will have to go elsewhere.

There are some differences when it comes to style. While both advisors encourage easing into investing with small amounts of money, Stash suggests setting up auto deposits (what it calls “Auto-Stash”) where you add small amounts on a regular schedule to grow your account over time. Acorns, on the other hand, highlights round-ups, but if you’re only depositing your spare change, it will take a long time to build a substantial balance.

There are also differences in how many investment choices you have. Stash offers nearly 200 single stocks to choose from and dozens of ETF combinations, while Acorns offers only five ETF-based portfolios that range from conservative to aggressive.

Stash’s advantages

  • There are several ways to reach a human. Stash offers customer service via phone and email, so you can always reach out to a customer service rep with your queries. And Stash’s Questions page can field basic inquiries on a wide array of topics.
  • There are great opportunities for learning. For the rookie investor, Stash’s website features Learning Guides on things like budgeting, retirement planning and basic investing concepts.
  • You have more investing options. Stash offers the ability to put as little as $5 into stocks of companies you know (3M, Adobe, Facebook, etc.) and/or to invest in one of their dozens of themed ETF baskets, which sport names like “Real Estate Tycoon” and “Foreign Heavyweights.”
  • Retirement investing is free for young 20-somethings. Stash offers free retirement investing for anyone under age 25.

Acorns’ Advantages

  • You can earn bonus cash. Acorns offers a feature called Found Money, in which 200+ retail partners invest a percentage of your purchase in your Acorns account when you shop with them. Examples include Barnes & Noble, Lyft, Groupon and Sephora.
  • It’s free for college students. The earlier you invest, the better off you’ll be, so it’s great that Acorns offers its Acorns Core services to college students at no charge.
  • Savings are automated. If you connect all your credit cards to Acorns, you’ll be saving spare change with every purchase, no matter what. For people without a lot of discipline for savings — or who feel that they can’t afford to put any money away — this is a low-key way to sock some dollars into a safe place.

Stash vs. Acorns: Which is best for you?

Both of these robo-advisors are reasonable options for the novice investor, but they’ll appeal to different people. Stash is a good option for someone who has a small amount to invest and who’d like to steer their portfolio a bit by choosing some stocks and ETF combinations from Stash’s offerings.

Acorns is also a good choice for the small-cash investor, but better for someone who doesn’t mind being limited to the five portfolios the advisor offers based on risk tolerance, and who may feel they don’t have the discipline to save and invest. That said, the fees on small-balance portfolios could eat into your earnings over time, since they’re a disproportionately large percentage of the total. If you save up a substantial sum at either advisor, you may be better off moving to another robo-advisor with lower fees and more account options.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Kate Ashford
Kate Ashford |

Kate Ashford is a writer at MagnifyMoney. You can email Kate at [email protected]

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Investing

What is Socially Responsible Investing (SRI)?

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Investing in the stock market might seem like an odd way to help make the world a better place. But with socially responsible investing (SRI), there are more ways than ever to positively impact the world when putting your money to work in the market. SRI, also known as sustainable and responsible investing, is like voting with your dollars: Investing in companies that are pursuing positive change and actively not investing in companies you feel are harming the world.

Total assets under management using SRI strategies in the United States have increased from $8.7 trillion at the beginning of 2016 to $12 trillion at the end of 2017, or one out of four dollars invested under professional management in the country, says Farzana Hoque, spokesperson for The Forum for Sustainable and Responsible Investment, a nonprofit dedicated to advancing SRI.


“Most of these assets are from institutional investors,” she said. “But individual investors are increasingly interested in sustainable and impact investing as well.”

What makes an investment socially responsible?

Money managers and investment experts judge the “social responsibility” of an investment based on the environmental, social, and corporate governance (ESG) of a company. Here are some more concrete examples of what kind of actions a company might take to raise or lower its ESG score in the eyes of SRI analysts:

  • Environmental: If the company’s operations involve spewing an unethical amount of carbon into the atmosphere or dumping tons of plastic into the ocean, it probably won’t receive a favorable environmental rating. Conversely, companies that pioneer innovative green energy technologies would expect a favorable environmental rating.
  • Social: Perhaps the broadest of the three groups of criteria that comprise the ESG, social factors cover everything from whether the company provides adequate parental leave to employees to whether it promotes community development.
  • Corporate Governance: In general, any actions or controversies involved with the internal management policies of the company fall under the category of corporate governance. A company that actively promotes racial and gender diversity on its board of directors would score high in this category, while a company with a record of participating in overseas corruption would score unfavorably.

Where do ESG scores come from?

One of the first questions that should leap to your mind is “How legit are these ESG scores and who is doing the scoring?” The answer is a combination of private analysis firms, such as Sustainalytics and MSCI, along with in-house experts at investment institutions such as Goldman Sachs and JP Morgan Chase all examine whatever data is available on a company to determine its ESG score.

Because each analytical team crunches the data according to its own internal process, the ESG score of a company — not to mention a mutual or exchange-traded fund that consists of multiple companies — can vary depending on which rating agency you or your financial advisor look at.

Does socially responsible investing make money?

The big question for even the most pure-hearted of investors is whether pursuing an investment strategy that takes into account a company’s or fund’s ESG score means losing out on those who happily pour money into tobacco companies or Big Oil. The answer is no, according to many experts.

  • Morningstar, an investment research firm, released a report in February 2019 showing that out of the 56 ESG indexes it examined, 41 outperformed similar indexes that didn’t incorporate ESG into how the companies were selected.
  • Axioma, a company that provides risk-management software to portfolio managers, found in a 2018 study that portfolios including a higher number of ESG investments “rarely underperforms the market, and often outperforms the market, especially over the last few years.”
  • Investment management company BlackRock has a white paper on ESG investing where they blunty asked “Do investors need to choose between returns and ESG? Our answer: no.”

There are reams of reports and analysis speculating exactly why ESG investments perform as well as they do, but for now it’s safe to say you aren’t paying a financial penalty for pursuing an ESG investment strategy.

How to start socially responsible investing

Choosing your investments based on their social impact has gone mainstream, meaning you can easily find a way to dive in no matter how much you want to invest or whether you prefer a robo-advisor or a traditional brokerage.

While you can certainly invest in individual stocks based on ESG scores, the same risks and drawbacks apply as when picking individual stocks without considering ESG — you lack the protection that comes with diversification. Instead consider investing with either a broker or a robo-advisor that offers a portfolio with different funds tailored for an SRI strategy. To help you get started, take a look at robo-advisor Betterment or brokerage Charles Schwab:

Betterment

This robo-advisor already has a lot going for it without considering its SRI portfolio, including its annual management fee of 0.25% for accounts under $100,000 and no minimum deposit. The SRI portfolio Betterment offers doesn’t give you a great deal of insight into what aspect of ESG the companies included excel at — environment, social or corporate governance — but it promises that it has eliminated the stocks of large companies with poor ESG scores from the SRI portfolio.

Charles Schwab

If a traditional broker is more your speed, Charles Schwab offers a laundry-list of more than 200 mutual funds and ETFs they’ve pre-screened as making “investments based on such issues as environmental responsibility, human rights, or religious views.” You’ll have to do some legwork in researching the fund you’re interested in to see what aspect of ESG it focuses on (the Green Century Balanced fund concerns itself with environmental sustainability, for example) but you have the benefit of doing business with what we feel is one of the best brokers around.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

James Ellis
James Ellis |

James Ellis is a writer at MagnifyMoney. You can email James here

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Investing

Best Online Brokers for Beginner Investors 2019

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

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.

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

Robo-advisor

Annual Management Fee

Average Expense Ratio (moderate risk portfolio)

Account Minimum to Start

Wealthfront

0.25%

0.09%

$500

Charles Schwab Intelligent Portfolios

0.00%

0.14%

$5,000

Betterment

0.25% (up to $100,000); 0.40% ($100,000.01 or more)

0.11%

$0

SoFi Automated Investing

0.00%

0.08%

$1

Wealthfront: Low fees, high cash management APY

Wealthfront Advisers LLC 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 2.51% 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.

Wealthfront Highlights:

  • $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
Learn moreSecured
on Wealthfront’s secure website

Charles Schwab Intelligent Portfolios: Backed by a major brokerage

The Charles Schwab Corporation 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 300 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 300 physical branch locations for in-person assistance
Learn moreSecured
on Schwab Intelligent Portfolios Premium™’s secure website

Betterment: Great choice for smaller balances

Betterment Holdings Inc. 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.

Betterment Highlights:

  • $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
Learn moreSecured
on Betterment’s secure website

SoFi Automated Investing: Low costs, great perks

SoFi Securities LLC 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
Learn moreSecured
on SoFi Wealth’s secure website

Best online brokers for beginners

Broker

Fee per trade

Commission-free ETFs

No-transaction-fee Mutual Funds

Charles Schwab

$4.95

514

3,457

Fidelity

$4.95

503

3,636

TD Ameritrade

$6.95

571

3,887

E-Trade

$6.95

277

4,222

Charles Schwab: Full-featured offering

The Charles Schwab Corporation 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 $4.95 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 $4.95 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
Learn moreSecured
on Charles Schwab’s secure website

Fidelity: Strong mutual funds options

Fidelity Brokerage Services LLC Fidelity is well known for its retirement offerings and has a lot to offer beginners. Their $0 minimum to open an account, low $4.95 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.

Fidelity Highlights:

  • $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
Learn moreSecured
on Fidelity’s secure website

TD Ameritrade: Broad offering of investments

TD Ameritrade 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 $6.95 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
Learn moreSecured
on TD Ameritrade’s secure website

E-Trade: Good research options

E-Trade Securities LLC E-Trade is a well-known online broker and offers a wide assortment of available investments for beginners. The $500 minimum to open an account and high $6.95 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.

E-Trade Highlights:

  • 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
Learn moreSecured
on E-Trade’s secure website

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:

Ally Invest
Charles Schwab
Fidelity
Firstrade
Interactive Brokers
J.P. Morgan You Invest
Just2Trade
Lightspeed
Merrill Edge
Robinhood
E-Trade
eOption
SogoTrade
Stash
T. Rowe Price
TD Ameritrade
TradeStation
USAA Investments
Vanguard
Zacks Trade

All robo-advisors considered:

Acorns
Ally Invest Managed Portfolios
Betterment
Charles Schwab Intelligent Portfolios
E-Trade Core Portfolios
Ellevest
Fidelity Go
Folio Investing
FutureAdvisor
Merrill Guided Investing
Motif
Personal Capital
SigFig
SoFi Automated Investing
TD Ameritrade
Vanguard Personal Advisor Services
Wealthfront
Wealthsimple
WiseBanyan

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Joshua Rowe-Heupler
Joshua Rowe-Heupler |

Joshua Rowe-Heupler is a writer at MagnifyMoney. You can email Joshua here

Kat Tretina
Kat Tretina |

Kat Tretina is a writer at MagnifyMoney. You can email Kat here