There’s never been an easier time to start trading stocks, especially for beginners. Countless apps and websites now offer commission-free trading, and many have extensive educational resources as well. The plus side of this is that many of the barriers that have prevented beginners from investing have been removed, from the high fees charged by traditional firms to the intimidating meetings with financial advisors in ivory towers.
The potential downside is that it encourages beginners to become stock traders rather than investors, and that can be a financially dangerous game. Nevertheless, for those who can maintain financial discipline, there’s a wide range of helpful and low-cost trading apps available to the general public. Here’s a look at some of the best.
Robinhood was the first popular trading app to unveil zero-commission trading, and it remains among the industry leaders. Many of Robinhood’s features have now been copied by other apps, but it continues to innovate with a focus on making its service user-friendly and easy to use. Robinhood does allow fractional share trading, which not all zero-commission apps do. In addition to free stock and ETF trading, Robinhood also offers commission-free cryptocurrency trading.
Robinhood’s interface is also helpful for beginning investors as it allows them to customize their news feeds and alerts. For example, you can elect to receive push notifications if one of your stocks moves by 5% or 10%, or if a stock you are watching hits a predesignated target price.
M1 Finance is a zero-commission investment app and website that offers a bit of a unique experience for investors. One of the huge benefits of using M1, in addition to the zero-commission structure, is that you can buy fractional shares at the firm. Thus, even a $100 investment can be allocated across 10, 20 or even 50 different stocks, regardless of their share price.
To accomplish this, M1 Finance has each investor create a “pie,” with each investment comprising a slice of that pie. Individual slices can be weighted anywhere from 1% to 100% of a particular pie and can be changed at any time, with M1 Finance automatically rebalancing the account after any changes.
One of the few drawbacks of using M1 is that there is only one trading window per day, or two for paying “M1 Plus” members. Thus, this platform is not great for traders who need to get in and out of their positions rapidly. Of course, the flip side of this is that it prevents over-trading and encourages long-term investment.
SoFi, short for Social Finance, was originally a student loan provider. Now, the app- and web-based fintech offers a wide range of products, from home mortgages and personal loans to savings accounts, credit cards and a no-commission investment platform that includes cryptocurrency. Thus, SoFi can be a good option for investors who are also looking for a mobile-based one-stop shop that covers all of their financial needs in a single app.
SoFi does offer fractional share trading, but its pool of available stocks is limited. Although you can trade nearly any stock you want for zero commissions, if you’re looking to purchase fractional shares, you can only buy stocks and ETFs in the firm’s “Stock Bits” program. Although many of the most popular stocks and ETFs are included in Stock Bits, such as Netflix, Amazon, Apple, Facebook and Tesla, not all companies are available for fractional-share purchasing.
SoFi is also notable for its various sign-up and referral promotions that change from time to time. As of mid-May 2021, for example, SoFi offers a $100 “welcome” bonus for customers who make at least $1,000 in direct deposits in the first 30 days after opening an account. Customers can also earn up to $310 for referring friends who fund personal or student loans.
Get To Know: SoFi Review: No-Fee Cash Management With Perks
If you’re looking for an “old-school” discount broker that also has modern research and trading capabilities to go along with zero commissions on stock and ETF trades, Charles Schwab might suit your needs. Schwab was one of the first discount brokers, dropping per-trade commission costs from the hundreds or even thousands of dollars charged by full-service firms to just a few dollars. In October 2019, Schwab dropped its standard commission rate from $4.95 per trade to zero, making it the first major firm to move to zero commissions.
In addition to zero commissions, Schwab offers a complimentary, no-fee High-Yield Checking account that comes with a debit card that rebates ATM fees anywhere in the world. This can be a huge advantage for traders who travel a lot. Schwab also offers fractional-share trading through its Schwab Slices program, although trades are limited to S&P 500 stocks.
TD Ameritrade is another “old-school” discount brokerage house that has modernized and now offers zero commissions on most stock and ETF trades. TD Ameritrade regularly receives awards for its trading platforms and tools, in addition to its educational offerings. One of the advantages of TD Ameritrade is that in addition to being simple to use for beginning investors, it also has advanced trading platforms like its trademarked thinkorswim platform. These advanced trading tools offer benefits like third-party research, elite-level analysis and testing strategies and idea generation tools. TD Ameritrade offers additional assistance for traders, ranging from in-app live chat to economic indicators straight from the Fed.
Bet on the Future: 7 Best Long Term Investments To Consider
If you’re an active stock trader, Webull may be of interest to you. Unlike many of the other apps on this list, Webull is dedicated solely toward active traders, with no other financial products offered. Webull doesn’t offer fractional share trading, nor does it offer mutual funds. However, it does offer cryptocurrency trading and a host of advanced trading tools, including real-time quotes, detailed charting tools and Level 2 Nasdaq quotes, all with no account minimums or trading commissions. Webull also offers IRAs and full extended-hours trading.
Discover: The Dangers of Day Trading
Stash isn’t technically a commission-free trading app, but account holders do have access to zero-commission trading after they sign up for a monthly fee account. The basic Stash account charges a $1 monthly service fee, although there are also $3 and $9 options that provide access to extras like an IRA account, custodial accounts and additional benefits.
Stash is clearly designed for beginning investors to educate them on the markets and get them involved with trading. The app offers fractional shares and access to thousands of stocks and ETFs. Actual trading within the app is free, although there’s no avoiding the monthly account fee. When you sign up for Stash, you’ll be asked some questions about your investment preferences and needs, at which point you’ll be presented with a selection of recommended investments. Specific investment choices are up to each individual investor, however.
Acorns is another investment app designed to appeal to beginning investors. Acorns accounts carry a monthly fee of either $1, $3 or $5. As with some other investment apps, Acorns creates a suggested portfolio of exchange-traded funds for you to invest on based on your self-reported investment objectives and risk tolerance. What is unique about Acorns, however, is that your account contributions primarily come from your spare change. Whenever you make a purchase, your total is rounded up to the next dollar, with the additional amount being automatically invested into your chosen portfolio. For example, if you pay $2.52 for a cup of coffee, the Acorns app will automatically round up that purchase to $3 and invest the extra 48 cents into your portfolio. You are, of course, free to contribute additional money at any time.
Not a Robot: How To Find the Best Financial Advisor for You
Starting Out: 10 Affordable Stocks You Can Buy on a Budget
Betterment isn’t a zero-commission trading app in the vein of Robinhood or some other popular apps. Rather, it’s a so-called robo-advisor, allocating funds to various exchange-traded funds according to customers’ self-reported investment horizons, objectives and risk tolerance. Fees at Betterment run 0.25% of assets annually for the service, or 0.40% for premium investors.
For beginning investors, a quality robo-advisor like Betterment can be a good choice, as it provides professionally managed portfolios that match investor needs for a low price. However, Betterment isn’t a true “trading app,” as investors cannot trade in and out of individual stocks whenever they choose. Betterment also has annual fees; although they are low, they are higher than the zero commissions charged by other investment apps for stock and ETF trades.
Start Small: 7 Best Ways To Start Investing With Little Money
Wealthfront is a robo-advisor in the vein of Betterment, charging 0.25% per year to construct and maintain a portfolio of exchange-traded funds matching an investor’s objectives and ability to handle risk. Like Betterment, Wealthfront does not allow the commission-free trading of individual securities. However, it does aim to create long-term wealth via its risk-adjusted portfolios. It also offers a host of educational information to help beginners learn about investing.
One of the advantages Wealthfront has over Betterment is that it provides financial planning advice for various goals using real-world data. For example, if you’re looking to save for a home, Wealthfront uses your actual financial data and integrates real-world housing information from Redfin to provide more relevant planning solutions.
More From GOBankingRates