FROM OUR PARTNERS

Best Index Fund Brokers of 2022

Ashley Jackson

Looking to get started in index funds? Set yourself up for success by selecting a broker that understands your needs. We’ve considered the best index fund brokers based on commissions, account minimums, ease of use, and overall quality.

Trade a wide range of financial assets

$0 - $9.95

Fee Per Trade

$0

Account Minimum

Overview

Ally Invest offers competitive pricing on financial securities and robust research tools to help you make better-informed investment decisions.

What we like

  • Low cost commissions 
  • Wide selection of product offerings 
  • Up to $3,000 cash bonus
  • No minimum deposit required
  • Up to $75 for brokerage transfers

What we don't

  • Crypto not supported
  • Mutual fund fees

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 index fund brokers do?

Index fund brokers are financial services companies that offer investors access to various index funds available from ETFs to mutual funds. These brokers are not only investment advisors and financial planners but also help investors manage their portfolios by providing access to low-cost and transparent investments.

Why use index fund brokers?

There are many reasons why you should use an index fund broker:

  • Save time: When managing multiple accounts across different platforms, it can be hard to track what’s happening with each one. Index fund brokers will do this for you automatically so that all your accounts are up-to-date with any changes or transactions made by other parties, such as new deposits or withdrawals.
  • Avoid behavioral mistakes: Many investors make behavioral mistakes by trying to time the market or chasing hot stocks and sectors that may not be worth investing in. These mistakes often lead to poor performance and underperformance compared to benchmarks like the S&P 500.
  • Acquire investment advice: Another benefit of using an index fund broker is that because of their experience with these types of investments, they can advise on how best to manage your portfolio. They can tell you which companies are performing well at any given time and how much money should be invested in each one. They can also suggest when it might be a good idea for you to sell some stocks and replace them with others that may perform better at any given time.

Are index fund brokers safe?

Index fund brokers are safe. Your broker should be regulated by FINRA (the Financial Industry Regulatory Authority) or another national regulator. This means they’ll have to follow strict rules and regulations to protect investors from fraud and other types of misconduct. This also means you’ll be eligible for certain protections under federal securities laws, including arbitration if something goes wrong with your account or investments.

What are the fees for index fund brokers?

Over the last decade, the average U.S. stock market fund charges 0.06 percent or $6 for every $10,000 invested. The average U.S. stock ETF charge 0.18 percent, or $18 for every $10,000 invested. However, over the years, purchasing index funds have become significantly cheaper and in some cases free to purchase. There will still be a management expense ratio involved with every index fund which is the management fee for managing funds.

What index funds can you invest in?

There are many different types of index funds you can invest in. Here are some of the most popular:

  • Vanguard S&P 500 ETF (VOO): The Vanguard S&P 500 ETF is meant for those who want to invest in the U.S. stock market but don’t know how to navigate all the different choices. The fund closely tracks the S&P 500 index, a benchmark of 500 large-cap stocks from across all sectors of the economy.
  • iShares Russell 1000 (IWB): The iShares Russell 1000 (IWB) tracks the Russell 1000 Index, which consists of the 1,000 largest U.S.-listed companies by market cap. This fund offers broad exposure to U.S. large-cap stocks. It should be considered if you’re looking for easy diversification in your portfolio but don’t have enough money to buy shares of all 1,000 companies individually.
  • Vanguard Total Stock Market (VTSAX): This is Vanguard’s flagship fund and one of its most popular offerings. It tracks the entire U.S. stock market, including large, medium, and small companies. It’s an excellent choice for investors looking for broad exposure to the U.S. economy through stocks.
  • Invesco QQQ (QQQ): The Invesco QQQ exchange-traded fund is an equity index fund that invests in the largest 100 nonfinancial companies listed on the Nasdaq Stock Market. The fund uses an equal-weighted approach to minimize market bias by distributing assets equally among holdings. It provides exposure to growth stocks.

Benefits of investing in index funds

Here are some of the benefits of investing in index funds:

  • Built-in diversification: Index funds are designed to follow the performance of a particular sector or market segment. That means they’re automatically diversified among many companies and industries, reducing risk compared with individual stocks.
  • Low fees: Investing through an index fund broker is a great way to save money on fees. You purchase an index fund that will contain multiple stocks instead of purchasing individual stocks which could cost you more in commissions.
  • Minimal maintenance: Another benefit of investing through a broker is the minimal maintenance involved with index funds. You don’t have to track which stocks are bought and sold or monitor how much money is invested in each company. The company in charge of the fund will do this for you automatically.

How to choose the best index fund brokers

Here’s how to choose the best index fund broker for your needs:

  • Investment styles: The first thing to look at when choosing an index fund broker is the investment styles in their lineup. You want to find one that offers the types of funds you’re interested in buying. If they don’t offer them, you’ll have to open multiple accounts with different brokers and transfer money between them whenever you want to buy into a new fund type.
  • Costs: Costs and fees are where things get tricky when choosing an index fund broker. At first glance, it might seem like there’s no difference between two brokers offering similar-performing funds at similar prices with similar minimum investments. But there’s quite a bit of variation between brokers here: some charge commissions while others charge fees; some charge both; some charge neither; some let you trade commission-free but charge fees for other services like transferring money.
  • Tools, education, and features: You want to ensure that your investment experience is positive and easy whenever possible. Look for brokers who offer the tools and education to help you succeed with your investing plan. The more resources they provide, the better off you’ll be as an investor.
  • Track record of reliability: The next thing to consider is whether the company has been around for a while and was not involved in any major scandals or problems. You also want to ensure it’s registered with regulatory bodies such as FINRA and SEC.