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Best Discount Brokers of 2022

Ashley Jackson

Discount brokers are a great way to get started with investing. Set yourself up for success by selecting a broker that understands your needs. We’ve considered the best online brokers based on commissions, account minimums, ease of use, and overall quality.

Get up to $625 when you open and fund an account

$0

Fee Per Trade

$0

Account Minimum

Overview

J.P. Morgan Self-Directed Investing offers beginners and seasoned investors free trades and a portfolio tool to help build out their asset allocation.

What we like

  • Unlimited trades with $0 commissions
  • No minimum investment
  • Manage investments from a mobile app
  • Portfolio builder tool to help with asset allocation
  • Access to research and insights

What we don't

  • Limited accounts, such as no SEP-IRA
  • No fractional share trading

INVESTMENT AND INSURANCE PRODUCTS ARE: NOT A DEPOSIT • NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE

Copy investments from successful traders

$0

Fee Per Trade

$0

Account Minimum

Overview

eToro is a multi-asset platform that offers both investing in stocks, cryptocurrencies, and trading in CDF assets. It provides an innovative approach to ‘Social Trading,’ also known as ‘Copy Trading.’ Social trading allows users to connect, share their trades, and copy successful traders’ trades for potential gains.

What we like

  • Commission-free real stock trading
  • Offers money and risk management tools
  • A lot of learning materials available
  • Offers a free demo account
  • Copy successful traders investments

What we don't

  • Higher spreads and rollover fees
  • High non-trading fees

Discover new ideas from an active investing community

$0

Fee Per Trade

$0

Account Minimum

Overview

Public provides access to a powerful suite of tools, daily insights from millions of investors, and curated content and news, so all members can have the tools and resources needed to invest with context.

What we like

  • All-in-one investing platform 
  • Wide selection of product offerings 
  • Commission-free
  • Insights from an investing community of millions
  • Invest in any fractional asset
  • Live in-app shows about the markets

What we don't

  • Limited account types
  • No in-person customer support

Margin trading available with premium account

$0 - $9.95

Fee Per Trade

$0

Account Minimum

Overview

Axos Self-Directed Trading provides investors commission-free trades and an all-in-one solution for banking and investments.

What we like

  • Commission free trading on most assets 
  • Easy to use platform
  • Wide selection of product offerings 
  • No minimum deposit required
  • Extended market hours for premium accounts
  • Joint accounts available

What we don't

  • Crypto not supported
  • Premium account required for certain features
  • No in-person customer support

Offers fractional share trading

$0

Fee Per Trade

$0

Account Minimum

Overview

SoFi allows you to trade cryptocurrencies, stocks, and ETFs. It also uses the SIPC protection scheme and offers up to $500,000 in insurance coverage.

What we like

  • Free trading on ETFs and stocks
  • Offers fractional shares
  • A wide variety of cryptocurrencies
  • Free financial advice
  • No account minimum

What we don't

  • Does not offer mutual funds, bonds and options
  • Limited track record

What do discount brokers do?

Discount brokers are online trading firms that connect investors directly with the financial markets. Most discount brokers offer a wide range of investment products, including stocks, bonds, mutual funds, and exchange-traded funds (ETFs).

Why use discount brokers?

The following are some reasons why you should use discount brokers:

  • Affordable access to investments: Instead of paying high commissions for every trade you make, you simply pay one flat fee per year or quarter, and in some cases free trading. This allows you to make unlimited trades without worrying about eating up all your profits in commissions alone.
  • Research at no cost: Discount brokers offer valuable research tools that can save money if used properly. For example, they often offer stock reports on publicly traded companies. These reports help investors identify companies with growth potential and avoid those that may be overvalued or underperforming.

Are discount brokers safe?

Reputable discount brokers are safe. Discount brokers are regulated by the Securities and Exchange Commission (SEC) and must abide by strict rules to protect their client’s interests.

Search up the discount broker to see if they are licensed and registered to determine if they are legitimate.

What are the fees for discount brokers?

Discount brokers charge lower commissions than full-service brokerages for transactions. They make money primarily by charging customers a flat fee for each trade they make. Some brokers charge additional fees if you want to sell stocks or ETFs within a certain timeframe after buying them, known as short selling.

Generally, The fees to trade with online discount brokers range from $4.95 to $20, while the most common fees are between $7 and $10. However, there are brokers that charge no fees.

What can you invest in through discount brokers?

The following are some of the most common types of investments that you can buy through a discount broker:

  • Stocks: Stocks are company shares that you purchase and hold until you sell them. You can buy and sell stocks on the stock market through your discount broker, a financial institution.
  • ETFs: ETF stands for exchange-traded fund. An ETF allows you to invest in various sectors or companies without knowing each company’s ins and outs.
  • Mutual funds: Mutual funds pool money from multiple investors into one account and then invest it in different stocks or bonds. The benefit of mutual funds is that they offer small investors access to professionally managed portfolios of stocks, bonds, and other securities at lower costs than they could achieve on their own or through an investment advisor’s services alone.
  • Bonds: Bonds are debt instruments that pay a fixed interest rate over time until the bond matures. The difference between the bond’s price and face value is called the “par value.” Bonds can be traded on an exchange, but they’re also available directly from the issuer in what’s known as a “secondary market.”
  • Options: Options are contracts giving investors the right — but not the obligation — to buy or sell an asset at a specified price within a certain period. Options may be exercised before expiration, typically several months after purchase.
  • Cryptocurrency: Cryptocurrencies are digital currencies — meaning they aren’t physical like dollars and euros — that can be traded online. They’re decentralized, meaning there’s no central bank regulating them.

Benefits of investing through discount brokers

Here are some benefits of investing through discount brokers:

  • Cost-effective diversification: If you have a small amount of savings and want to invest in many different stocks, you can reduce your portfolio costs by using discount brokers.
  • Accountability: The SEC requires all financial advisors and broker-dealers to be licensed. They must abide by specific rules and regulations, including disclosure of fees and commissions. Discount brokers don’t provide advice, but FINRA regulates them.
  • Time: Investing through discount brokers means you can buy and sell stocks immediately. While a full-service broker might make you wait for days before your order is processed, a discount broker will usually complete the transaction in a few hours. This can be particularly useful if you take advantage of a sudden market opportunity.
  • Simplicity: Discount brokers make it easy to invest in stocks by providing detailed instructions on how to do so online. They also offer research reports for which stocks to purchase, so you can see if it makes sense for you or not.

How to choose the best discount brokers

When you’re choosing a discount broker, there are several things to consider:

  • Minimum trades: The minimum trade amount is one of the most important factors when choosing a broker. If you plan on placing small trades, choosing a brokerage with no minimums or only requiring a small initial deposit would be ideal.
  • Research reports: Investment research reports are essential when making investment decisions, but they can be expensive if purchased from traditional brokerages like Merrill Lynch or Morgan Stanley Smith Barney. Discount brokers offer free research reports on stocks and ETFs so that investors can make informed choices about which securities they want to own for their portfolios. Research reports can be an excellent way to learn about companies before investing in them and provide ideas for investing your money in the future.
  • Service: The more services you can get from one company, the better for you. You don’t want to deal with different companies for different needs. If you want to buy stocks or bonds from a broker and have an IRA account with them, ensure that both services are offered by one company.
  • Cost: The cost of services should be reasonable and competitive with other brokers. Make sure that any fees charged by your broker are clearly stated on their website or in their contract, so there are no surprises later on. Also, make sure that they offer free trades or other ways to reduce costs like rebates on commissions or monthly fee waivers if you maintain certain minimum balances in your account throughout each month, called “minimum balance requirements.”