Are you a day trader or do you have a more set-it-and-forget investing style? Are you crypto crazy or are stocks more your speed?
The right brokerage for you will depend on several factors, including your investment type and the important features.
Important considerations when selecting a brokerage platform are the investment options available, the fees for the options you want to select on the brokerage, the customer support and the user experience overall. Generally, low costs and low fees are beneficial. But sometimes added costs can be helpful if it is something that simplifies things for an investor or aligns to the values or the user experience an investor is seeking.
– Autumn Knutson, CFP and founder of Styled Wealth.
Depending on what kind of investor you are, you’ll need to find a broker that has the features you require. Here are the features you should look for depending on your investment style.
Types of Costs and Fees You Can Expect to Pay
Though the best online brokers charge low fees, you’ll likely be responsible for covering certain costs as you invest.
For active traders, commission is likely the most important fee. Commissions add up if you trade frequently. For investors who want to use the platform’s model, the advisory fees as well as inherit fees from the investments are important. These are fees that are proportional to your investable assets.
– Lei Deng, CFA, CFP and founder of Savor Financial
Here are the most common types of fees you can expect:
Commission Rates for Trades
You might be charged a trade commission when you trade a stock, ETF or other security. Though many brokers, including those listed on this page, offer no-commission trades, you might still be responsible for a contract fee. For example, you may be able to trade options without a base commission, but you’ll be charged a fee—often around 60 cents—per options contract. If you’re an active trader, you’ll want to take these rates into consideration.
Withdrawal and Transfer Fees
An online broker may charge you to transfer money into your account or to withdraw your funds. “If you were in any way unsatisfied with a broker, how easy is it to break up with them?” Deng asks. “Look into any potential transfer fees, and if they offer to transfer your investment in kind or you have to sell all investments (and incur fees and taxes) before you can take your money out.”
Some of the best brokers on our list—Charles Schwab, Fidelity and IBKR—don’t charge for withdrawals. The remaining brokerages charge between $50 and $125.
Fees for Account Management or Inactivity
The best online brokerages usually don’t charge a monthly account management fee.
Some, however, charge an inactivity fee. EToro and TradeStation are the only brokerages on our list that charge an inactivity fee.
What Type of Brokerage Account Do You Need?
Retirement vs. Nonretirement Accounts
As you might expect, a retirement account is designed to hold and invest the funds you plan to use after you retire. Nonretirement accounts are other investment accounts that let you invest and trade in the short and long term. There are some notable differences between retirement and nonretirement accounts.