In the last two years, the investment landscape has changed dramatically. We’ve seen a substantial drop in commissions and expenses from new technology, new tools helping investors. And a whole lot of competition between online stock brokers to stay at the top of the pack.
So, who did you find the best online stock brokers in 2020, with all these changes in mind?
We break down the top five online stock brokers picked by readers, along with some notable mentions, especially for certain use cases. We also highlight any incentive deals currently available via those businesses. If you don’t already use top online stock brokers, now is the time to make the move!
This year, Vanguard is the winner for a number of reasons. Vanguard is consistently the pioneer in the low price index fund – so if you invest directly with Vanguard, you will theoretically escape commissions and fees on transactions from your mutual fund buying.
In addition, Vanguard provides a full spectrum of account forms – from IRAs and Solo 401k’s, and 529 plans and HSAs.
The big drawback to Vanguard (if it matters even to you) is that investing outside of Vanguard funds can be expensive if you want to. Also, if you immerse yourself in the details of some of their products (like their Solo 401k), it’s not always the most robust. They do not have the cleanest investment application, either.
Bonus Offers for Vanguard: Vanguard does not have any bonus offers. Maybe they’re just too perfect to not have to entice you?
When it comes to selecting a full-service brokerage, Fidelity is still a top option. They have a large amount of commission-free funds to choose from, low expenses, and a full array of account types. And if you don’t invest in a commission-free fund, they’re $0 for stock fees, ETFs, and options trades.
In fact, many people are familiar with Fidelity, since they are (along with Vanguard) one of the main 401k plan managers. That’s why we called them our Best Online Retirement Broker, too.
Plus, Fidelity has offices nationally as opposed to Vanguard. While almost everything can be done online, it can be helpful every now and then to be able to go to an office with ease.
Fidelity Bonus Deals: Fidelity has dropped its bonus offers after going commission-free.
Robinhood was a notorious online broker all along. However, it was very highly rated by our readers, and it has one big plus – it is free.
Robinhood provides genuinely free trade commissions.
Robinhood has just announced they would begin promoting cryptocurrency trading on their platform.
It does however come with some drawbacks. The biggest is that they don’t accept many forms of common accounts – mainly IRAs, but also joint accounts, trusts, and accounts with custody.
It’s free though!
Robinhood Bonus Offers: When you refer a friend, you get a random share of the stock!
4. TD Ameritrade
TD Ameritrade is another firm consistently at the top of the list. We love the app from TD Ameritrade which we have called one of the best free investing applications.
Also recently TD Ameritrade entered the commission-free bandwagon, offering $0 commissions on cash, options, and ETF trades.
5. Charles Schwab
Schwab was an honorable mention on our lists before but they made it into the top 5 this year!
What people love about Schwab are their low-cost range of ETFs and an incredibly low mutual fund expense ratio. In fact, they don’t have minimum purchases for their mutual funds, so you can create an incredibly low-cost portfolio at Schwab using common funds such as the Schwab Total Stock Market Index (SWTSX).
Like most other companies on this list, Schwab also has stock trading commissions of $0. For most accounts, they also moved to $0 account minimums.
Schwab Bonus Offers: Get up to $500 when you open a new account.
These honorable mentions did not make the top 5, but if you want someone else to do the work for you when it comes to investing in and setting up your portfolio, they are really worth a look.
M1 Finance is a newcomer to this list but they did some impressive stuff with low-cost investments. They actually announced the move to a free pricing model late last year as well.
What’s so unique about M1 Finance is that it helps you to set up a low-cost portfolio for free. This portfolio may be one of their automated portfolios, or with almost any mix of ETFs and stocks you might set up your own. And for stocks, that also includes investment in fractional shares.
When you have configured your portfolio, M1 will automatically help you rebalance when you deposit more money into your account. And when you sell, selling overweight products in your portfolio often lets you rebalance your balance.
The only real drawback to M1 is that it doesn’t take your entire portfolio into consideration – you need to handle that. It also does not connect to websites such as Quicken, or Personal Capital. To monitor your portfolio you will use their dashboard.
M1 Finance Reward Offer: If you move over an account you get up to 2,500 dollars.
Betterment is a little different from almost all of these because they’re a real Robo-advisor. But Betterment is a top-notch option for those people who don’t want to invest themselves.
What makes Betterment perfect is that the investment is quick to get going. You just open an account, you answer a few questions, and you make a deposit. Betterment performs the rest.
The biggest drawback is its size. Their pricing is very straightforward – 0.25% for their digital basic plan, and 0.40% for their premium plan. But the more that you have with them under management, the more it will cost you. $50,000 in management fees would cost you $125 per annum.
However, a small, straightforward management fee may be the way to go for those who don’t want to ever worry about their portfolio.
Betterment Bonus Offer: Up to 1 year managed free.