The Best Cheap Online Stock Brokers
- Cheapest across the board, with no minimum account balance
- Price-per-trade matches or beats almost every competitor
- Advanced trading vehicles like options, forex, and futures
- Offers managed portfolios for just $100 minimum initial investment
How We Found the Best Cheap Online Stock Brokers
13 Trading Sites Analyzed
2 Experts Consulted
3 Top Picks
The Best Cheap Online Stock Broker
The best cheap online stock broker offers a variety of investment options at a low cost. We compared fees, account minimums, and other costs of the cheapest brokerage accounts to find which best suits different investing priorities. While most online brokers have dialed down their costs, we found three that we like more than the competition.
How We Chose the Best Cheap Online Stock Brokers
We focused on major names and newer players that were doing more to disrupt the space. We considered seven brokerages in total: Ally Invest, E*trade, Fidelity, Interactive Brokers, Charles Schwab, Merrill Edge, and T.D. Ameritrade — all major brokerages that have made a name for themselves offering exceptionally low rates. To find the best online brokerage among them, we investigated their platforms and compared fine print to see how they stack up in fees, learning resources, and trading technology.
Low account minimums
Whether you’re new to the stock market or a seasoned investor, choosing a brokerage with low overhead is a smart financial decision: Spending less money on fees means your investments have more room to grow. And while cheap trading platforms may not offer the same level of counsel or market research as a traditional firm, you can still find plenty of tools to make trading decisions smarter and faster. For the novice investor who wants to start small and spend small, we sought out accounts that have a low minimum balance (the amount you’re required to keep in your account at all times), no minimum activity rules, and as many $0 fees as possible.
Low trading fees
We didn't want to neglect experienced investors, though. For investors who've had time to let investments grow, a low minimum balance probably isn’t a top concern. But putting more money in shouldn’t make your fees swell proportionately. We looked for brokerages that kept fees low for larger accounts — or, better yet, offered more discounts for frequent activity. Some of the most important: broker-assisted trade commission, monthly activity fee, price per trade, and price per share. Though the numerical difference between two brokerages’ fees can appear small — an extra $2 per trade or a 2% bump in margin rates — those dollars and percentages still eat away at your investment. We looked for brokers that kept fees and commissions as low as possible.
Feature-filled trading platformThe 5 Best Cheap Online Stock Brokers
Why we chose it
Easy entry point
If you’re a relative newcomer to the stock market, you should look for a broker with low costs, plenty of educational resources, and, importantly, a low account minimum. Your best bet is Ally Invest. Because Ally Invest doesn’t maintain brick-and-mortar branches or run advertising campaigns, it is relatively unknown outside of the trading world. However, Ally does better than most online brokerages at making investing accessible to newcomers. The real welcome mat in front of Ally’s door: $0 commission on U.S. stocks, ETFs, and options, as of October 2019. And with a no minimum for independent brokerage accounts, just about anyone can get started investing with Ally.
Room to grow
Just because Ally makes investing approachable doesn’t mean it isn’t an expansive company. There are plenty of tools and opportunities to expand your investment horizons. Ally offers all the same major investment vehicles as other brokerages — stocks, options, ETFs, bonds, forex, futures, mutual funds. And on the subject of mutual funds, Ally provides access to nearly twice as many mutual funds (around 10,000 vs. 5,000) and charges a much lower mutual fund commission than the competition (around $9 vs. Schwab’s $75).
In addition to Ally’s swathe of investment vehicles, the brokerage also offers a host of accounts that fall under a managed portfolio. These portfolios are comprised exclusively of exchange-traded funds (ETFs) — bundles of investments that trade on the open market like stocks. They offer similar diversification to mutual funds, but typically carry lower expenses.
In addition to small fees for holding the ETFs themselves, Ally charges a 0.3% advisory fee for its legacy managed portfolio product. That's a pretty middle-of-the-road percentage in comparison with other full-service brokerages but slightly higher than companies that offer only managed portfolios. We discuss these robo-advisor companies below. Ally offers one managed portfolio type without advisory fees — a cash-enhanced managed portfolio that balances risk by putting 30% of the portfolio in an interest-bearing cash buffer.
Points to consider
Difficult to find account specifics
Ally boasts an aesthetically pleasing and easily navigable site, but buries much of the hard data that we were craving. From the easy-to-reach pages, scout out fine print hyperlinks promising “More Details” to find consolidated information about fees, investment vehicles, and account types.
Light on education
Ally takes a light approach to education and research. While having more in-house resources would improve the overall client experience, you can still find plenty of information elsewhere on the internet. And in-house improvement is on the horizon: Since Ally’s merger with TradeKing, its original system has seen a boost in tools and technology.
Why we chose it
Schwab puts extensive information on accounts, products, as well as wider investment education front and center, hitting you with its expert counsel and breaking news. Not only does the firm provide access to independent research, it also publishes relevant in-house research.
Charles Schwab offers a managed portfolio option, Intelligent Portfolio, available for a large number of managed account types ($5,000 account minimum). Unlike every other managed account we looked at, it charges no advising fees. Instead, Schwab makes money by holding some of the underlying assets of the accounts. The only fees associated with the account come from the investments, and while that percentage increases to a substantial amount (from 0.07% to 0.21% as risk builds), it’s still lower than most.
Automated financial advisors are the wave of the future, but many people don’t feel comfortable putting their life’s savings in the digital hands of a computer. Charles Schwab has developed a half-and-half solution: A hybrid service, Intelligent Advisory puts both financial professionals and financial algorithms to work. A nice little solution, so long as you have $25,000 to plunk down.
Traditional brokerage feel
Charles Schwab has retained more of a classic brokerage feel through its in-person presence (you can schedule a free consultation with a financial advisor) as well as its more traditional account minimums. Charles Schwab offers a deluxe set of services, but depending on the account you choose, you don’t have to invest a correspondingly huge amount. Opting for an independent brokerage account gives you access to the resources of a traditional, full-service brokerage without putting down a traditional amount. Plus, as of October 2019, all U.S. stocks, ETFs, and options can be traded commission-free, following in the footsteps of brokers like Robinhood.
Points to consider
More expensive than Ally
Just about every basic fee charged by Charles Schwab goes toe-to-toe with Ally. The price between the two does jump in certain instances — broker-assisted trades go up by $5 and mutual fund commissions go up nearly $50. However, both brokers have $0 account minimums to open a brokerage account, and the breadth of tools and resources available with Charles Schwab does a lot to justify the extra expense.
If you need personalized settings and advanced features, StreetSmart Edge provides both in spades. You’ll just have to learn how to use it. User feedback about clunky trading tech has led the company to revise its approach, but if you still find the desktop platform unwieldy, there’s also a web-based platform, Trade Source, which offers streamlined trading and market insights on the go. Investors that are new to the game may find the web-based option more accessible.
Why we chose it
Rewards active trading
For pure trading and competitive prices, no other brokerage comes close to Interactive Brokers. Previously, IB required a $10,000 minimum account balance (one of the highest in the industry), but as of April 2019, it was dropped to allow people to open cash accounts with $0. However, IB still has the relatively high $10 monthly activity fee, which is charged if your trades don’t rack up at least $10 in commissions. With the tiny $1 per-trade fee, that means you’ll need to make ten trades every month or pay the difference, e.g. six trades will leave you with a $4 activity fee. On the other hand, it offers extremely low margin rates (their highest interest bracket still charges less than 3%) as well as the choice of fixed or tiered pricing, giving investors the opportunity to choose what makes more financial sense for them. Tiered structures like this will typically benefit high-volume traders.
Interactive Broker’s incredibly rich platform offers trading technology advanced enough for professional day traders. Choose from the web-based trading platform WebTrader and the more advanced, downloadable platform, Trader Workstation. Both are included for Interactive Brokers clients at no additional cost. Serious traders will likely gravitate to the Trader Workstation’s more in-depth features.
Protegés get perks
If you're a savvy investor who also happens to be under 25, you can open an Interactive Broker account with a monthly fee bumped down to $3 from $10. IB's recent announcement that it dropped commission for U.S. stocks and ETFs also has its benefits for younger investors who are getting their start.
Points to consider
Trading tech learning curve
Navigation in Trader Workstation is far from intuitive as tools are located in discrete sections. However, it is also customizable, allowing you to group together the resources you make frequent use of and hide the ones you don’t. The interface, like the rest of an IB account, only benefits experienced traders. However, IB has recognized the learning gap. To supplement the educational tools on Traders' University, IB has introduced a layout library (choose from pre-made setups and templates for different trading strategies) as well as an AI assistant. IBot can answer plain-English questions. But, like any other voice-activated helper from Siri to Alexa, it has its limits.
Futures trading violations
Back in 2012-2013, the company was fined for several violations relating to the management of futures market funds. The result was a pair of fines totaling $925,000. Because the fines occurred several years ago, and because futures trading is a fairly niche investment area compared to stocks and funds, we don’t think this is enough to cancel out Interactive Brokers’ overall value. However, if you’re planning on doing a substantial amount of futures trading, be aware of this mark on their record.
How to Choose a Cheap Online Stock Brokerage
Choose with your investment habits in mind
Your financial goals and your personal investing style will be the two biggest factors in choosing the right brokerage for you. We set out to find the strengths and weaknesses of the cheapest brokerages we could find, but you’ll still have to decide which offers the right combination of savings and services for your needs.
Weigh the worth of special offers
Special offers for opening a brokerage account can include a set number of free trades or even cash bonuses for investing above a certain amount. Read the fine print to be sure that these early benefits outweigh later costs, and whether those new client perks align with your investing practices. In other words, don’t be enticed into choosing a broker offering deals on investment products you don’t understand or aren’t ready to use. Since special offers are by definition short-term, we focused on set account pricing. In the long run, those are the savings that will impact your financial goals.
Start with virtual trading
One of the many reasons we prefer Ally Invest for new investors is because it offers virtual trading. With virtual trading, you can test out strategies before putting your own cash into the mix.
Online Stock Trading FAQ
The Best Cheap Online Stock Brokers: Summed Up
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