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Best Online Brokers of 2022

Ashley Jackson

Online brokers can save you time and give you a better trading experience. 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.

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

Trade a wide range of ETFs

$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

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

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

What do online brokers do?

Online brokers are financial services companies that allow you to buy and sell stocks, bonds, and other securities online. They offer various investment products and services, including research reports and analysis, margin accounts, instant stock quotes, and more.

The best online brokers provide access to thousands of stocks, mutual funds, ETFs, and other investments through their websites, mobile apps, or both. You can even trade most stocks and ETFs directly from your smartphone or tablet with the right app.

Why use online brokers?

Online brokers are becoming increasingly popular for traders. Here are some of the following reasons:

  • Minimal fees for trading: Online brokers have much lower fees than traditional full-service brokers, making them ideal if you only want to trade occasionally or if you prefer to keep your portfolio small. The average commission charged by online brokers is $0 – $3 per trade compared with $10 – $12 charged by traditional full-service brokers.
  • Research tools: Online brokers usually offer extensive research tools. These include real-time data, charts, and technical analysis tools to help you make informed investment decisions.

Are online brokers safe?

Like any financial product, online brokerage accounts involve certain risks. Some risks are specific to the industry, while others are common to any investment account. However, reputable online brokers are generally safe.

Make sure you do your due diligence on the broker before funding the account.

What are the fees for online brokers?

You’re most likely to encounter the following brokerage fees:

  • Trade commission: The amount you pay each time you buy or sell financial securities, typically a percentage of the total value of your transaction or a flat fee. For example, if you purchase $1,000 worth of Apple stock, and your broker charges 1% as its trade commission, you’ll owe $10 in trading fees. There are some online brokers that don’t charge trading fees.
  • Annual fee: Many brokers charge a flat rate annually for maintaining an account with them. This ranges from $50 to over $70 per year, depending on your account size and type.

You should be aware that there are other less common fees, such as inactivity fees for accounts that don’t do any trades, early withdrawal penalties if you close your account before it matures, and exchange fees if there is a difference between what one exchange charges versus another.

What can you invest in through online brokers?

You can invest in various financial securities from stocks, bonds, options, futures, and ETFs. Investors usually invest in ETFs given its low cost. Here are some ETFs:

Currency ETFs

Currency ETFs allow investors to make money from exchange rate movements by investing in foreign currencies. Traders often use them to take advantage of fluctuations in currency prices. Currency ETFs expose currencies’ value rather than their underlying assets’ value. If you think the dollar will get stronger, then buying an ETF that tracks the Euro or Canadian dollar could be beneficial.

Dividends and ETFs

Dividend-paying stocks tend to be less volatile than non-dividend stocks because shareholders get paid regularly for holding their shares. Dividends also incentivize investors to hold onto their stocks for longer periods since they know the company will continue paying them a percentage of its earnings over time. This is particularly true for large companies with excellent track records, such as IBM Corp., Microsoft Corp., Johnson & Johnson, and others.

Commodity ETFs

Commodity ETFs track an underlying commodity such as gold or oil rather than an equity index. They allow investors to profit from changes in commodity prices without buying physical commodities themselves.

Passive and active ETFs

Passive ETFs are designed to track the returns of an index, such as the S&P 500 or the Dow Jones Industrial Average. They’re often lower-cost than mutual funds because they don’t require human managers to choose stocks or bonds to buy and sell.

Active ETFs can invest in any asset class, but they are actively managed in an attempt to outperform an index. Thus, active ETFs take more risk than passive funds, but they potentially offer higher returns.

Benefits of investing through online brokers

The benefits of investing through online brokers include:

  • Trading flexibility: You can trade financial securities through your online broker. This means that you can place trades quickly and easily. You do not have to talk to a human being or wait on them to get back to you. You can place your order and go about your day. It is a very simple process that makes it easy for investors to buy and sell.
  • Transparency: When you invest, there are no hidden fees or charges that come along with the investment. You know exactly what you are paying for when it comes to fees, which makes investing much easier because you know how much money you will be investing versus how much will be going towards fees.

How to choose the best online brokers

To help you make an informed decision on the best online broker, consider the following factors:

  • Tools, education, and features: Look for one that offers a variety of educational materials and research tools so that you can make informed investment decisions. Many brokers also provide access to real-time market data, streaming news feeds, and analyst reports to help you stay on top of the financial markets.
  • Promotions: Some brokers offer special incentives such as cash bonuses or reduced trading commissions if you open an account with them. It’s essential to take advantage of any promotions your broker offers because they can help save money over time.
  • Commissions: This is one of the most important factors when choosing an online brokerage. The commissions charged by each firm vary considerably, and some can be very expensive compared to others. If you plan on trading large amounts frequently, this will make a big difference in your bottom line.
  • Account minimum: Some brokers have very high minimum account size requirements, while others don’t have any at all. This is important if you’re just starting with investing or if you’re just dipping your toes into the waters of day trading.