How We Determined The Winners
To pick the best online brokerages for beginners, we considered a dozen brokerages and zeroed in on options that offered competitive pricing and features most important to beginner investors and traders.
To make it onto this list, brokerages must offer commission-free stock and ETF trades and no recurring account fees . Other important focus areas include available investments, types of accounts, and high-quality investment platforms. Strong investment research and education resources were another plus, but carried less weight in the decision process.
Why Betterment Made Our List:
If you are looking for an investment experience where you explain your investment goals, hand over your money, and someone else takes care of everything for you, Betterment could be your best choice. Betterment is the oldest and best-known robo-adviser, an automated investment solution that’s quickly growing in popularity.
The term “robo-adviser” is a bit intimidating to some people, but rest assured an actual robot isn’t sitting there picking stocks for you. Instead, you answer some basic questions about your age and investment goals when signing up. Based on your answers, Betterment will assign you to a professionally designed portfolio where your assets are automatically kept in balance, among other computer-driven features.
Betterment is good for both taxable and retirement accounts. Pricing starts at 0.25% of your portfolio balance per year, though you can pay more for a plan that includes access to a human financial adviser as well. For most beginners, the basic plan covers your needs.
What to look out for: You’ll have to pay extra to take advantage of human advisor guidance if you can’t meet the $100,000 minimum attached to Betterment’s premium account.
- App store rating: 4.7 iOS/ 3.6 Android
- Consider it if: You want easy-to-use apps paired with excellent checking and savings accounts.
Newfoundland And Labrador: Newfoundland And Labrador Credit Union
The local Newfoundland and Labrador Credit Union is the most popular bank in Newfoundland and Labrador. It boasts 12 branches throughout the region and offers a full spread of financial products. Chequing accounts range from basic to premium, including a US dollar account, and there are several savings plans. There are special options for youth, students, and seniors across all banking products. NLCU also offers credit cards, including student cards, making it the top choice for Newfoundland and Labrador residents.
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When To Use A Savings Account
A savings account is a great place to keep money to help you reach your savings goals. In fact, you could choose to have more than one savings account if youre saving towards multiple goals at the same time and want to separate your progress towards each one.
Some experts recommend using a savings account to save for something you want to buy in about three years or less, such as:
- A vacation
- An emergency fund
Basic savings accounts give you easy access to your money accounts typically have fewer rules and no limits on deposits.
For longer-term savings goals, such as retirement or a down payment on a house, a basic savings account might not be the most efficient choice Thats because interest rates are typically quite low, so you wont earn as much as you could with other options, such as a registered retirement savings plan or guaranteed investment certificate . And youll pay taxes on the interest you earn in a non-registered savings account.
Its also not generally a good idea to use a savings account for day-to-day transactions, since many savings accounts limit the number of transactions you can make before paying fees. Instead, use your chequing account for daily banking needs.
» Plan for the future:How much money do you need to retire?
What Is A Chequing Account
As the name suggests, you can write cheques against a chequing account, and you might receive your paycheque into this account as a direct deposit. While writing a physical cheque isnt as popular as it once was, chequing accounts are still around. As they are used for everyday transactions, these accounts are accessible from ATMs, at tellers, online and apps. This type of account is where you store money you intend to spend on routine transactions, including Interac e-Transfer, bill payments, withdrawals, deposits, pre-authorized payments and point-of-purchase payments, like using your debit card at a store.
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Banks Are Not Born Equal Uncover The Best Banks In The Uk By Customer Service And The Top Bank Accounts
Best banks by customer satisfactionBest banks
Which UK bank comes top for customer satisfaction? Which one polls the best for its online and mobile banking service? And which one gives you good perks if you switch? Heres how to find the right account to make sure youre getting the best deal for your money.
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How we chose these accounts
Alternatives To Basic Savings Accounts
A savings account is a great option for most people, but it may not be the best type of bank account for all your needs. If you want to save money for less immediate financial goals, consider an option that earns more interest.
Alternatives to basic savings accounts include:
- Chequing accounts.
- TFSAs.
- High-interest savings account .
- Term deposits, like non-redeemable GICs, that lock your money away for a set period of time in exchange for a higher interest rate.
- Investments options, such as bonds, exchange-traded funds , and mutual funds, will help your money grow faster than it will in a savings account, but their value can also decrease if the market goes down.
Fortunately, you dont have to pick just one type of account. You can choose any of these accounts to help you reach your financial goals. Its all about finding the right combination of bank accounts for your needs.
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The Consequences Of Bank Inertia
Even at the most optimal bank for a given individual, the same inertia that applies to changing banks can apply to the dollars within those bank accounts. In a complex and often unnecessarily confusing investment environment, the money within a bank account feels safeâeven when that accountâs owner knows that the money could be put to a more appropriate use. As comforting as this safety may be, young adults who only keep traditional bank accounts are missing out on opportunities for long-term growth.
Bank account balances donât rise and fall on the whims of Wall Street emotions. The money is reliably there, day in and day out. And a sizable, and perhaps growing, account balance looks pretty nice, too. But the hesitations that stock market unfamiliarity can cause can have real consequences.
Other Options: Top Robo
If getting started is still too daunting and you want a low-cost option that manages a portfolio of investments for you, then a robo-advisor is a great option. A robo-advisor will create a portfolio based on your risk tolerance and time horizon, and youll pay a low fee based on how much you have in the account. And it still takes only a few minutes to get started.
Two of Bankrates top-rated robo-advisors are Betterment and Wealthfront.
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How To Choose A High
Most financial institutions in Canada offer HISAs, and you will want to consider which is the best fit for your needs. First and foremost, you should consider the interest rate. Conventional wisdom states that you want to look for a rate of interest that outpaces the rate of inflation or you will wind up with less buying power than you started with. In recent years the rate of inflation has been about 2%. During recessions, however, we can expect both interest rates and inflation to decrease.
You also want to carefully look at the HISA terms and conditions. Some may require you to keep a minimum balance, charge fees on transactions, limit withdrawals, or enforce lock-in periods.
Look to take advantage of cash signing bonuses or higher promotional rates, but also keep in mind that the long-term interest rate is more important than a short-term introductory rate.
Why Should I Care About The Best Savings Account Rates
If you have money left in your checking account each month or you can adjust your budget so that you do you should have a savings account with a high rate. It’s always helpful to have money set aside for emergencies, and it’ll earn you much more in an account that pays one of the best savings account rates than in a checking account.
Just make sure you can keep enough in your savings account to avoid monthly fees. Most online savings accounts don’t charge these, but many traditional accounts do.
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Capital One: Best Bank For Millennials
Capital One 360 Checking and 360 Savings are both best-in-class accounts. Low fees, good interest rates, and a focus on a high-tech experience all make Capital One a top overall bank and our number one pick for millennials. This bank was also our runner-up for the best bank overall, so it may be a good choice beyond the millennial demographic.
If you have an overdraft, you can choose to have it funded from a linked account or turned down automatically for no fee. This bank also offers free ATM use at Allpoint and Capital One ATMs. And, like the 360 Checking account, 360 Savings offers among the best interest rates in the industry with no minimum balance or activity requirements. Capital One is a good choice if you hate fees and want a bank account that just works.
The Best Online Bank In Canada: Tangerine
Over the past several years, online-only banks have grown in popularity, appealing to many of the 76% of Canadians who do most of their banking digitally. Online banks deliver their services through their website, on the phone, and on their phone apps so customers dont speak to a teller or visit a branch.
Our pick for best online Canadian bank is Tangerine, an online-only bank thats owned by Scotiabank. Although Tangerine is virtual, it does operate a face-to-face Tangerine Café in North York .
Tangerines No-Fee Daily Chequing Account gives you all of the functionality youll need for everyday bankingfor free. When you open an account you have to link it to an external account so you can transfer money into it. Then youll receive a debit card in the mail, which you can use to make purchases or withdraw cash. Transactions take place online, on the phone or at any of the more than 3,600 national Scotiabank ATMs , so you dont have to visit a physical bank. With the No-Fee Chequing Account, you receive unlimited debit transactions and Interac e-Transfers, as well as pre-authorized withdrawals and bill payments.
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How Savings Accounts Work
When you store your money in a savings account at a bank or credit union, the institution may lend those funds to other clients. However, your money is always accessible to you when you need it, and youll typically earn a small amount of interest. Your savings account may have rules about how many withdrawals you can make each month, but its typically easy to access your funds when you need them, and you can deposit as much as youd like.
Since savings accounts are designed to help you save money, they dont tend to come with debit cards or cheques like youd get with chequing accounts. If you have chequing and savings accounts with the same institution, you may be able to link them both to your debit card, but you may be charged a fee for using your debit card to withdraw money from your savings account.
To avoid potential fees, your best bet is to transfer the money from savings into chequing when you need it. If you have a smartphone, you can often do this via online banking or your financial institutions app.
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Why Charles Schwab Made Our List:
Charles Schwab is our choice for best overall brokerage for beginners because it offers something for investors with virtually any investment need. Not only does it give you the ability to manage all of your banking and investments with one login, but its investment tools are also designed in a way that they can grow with you as you learn more and level up your investing style.
For investors who want to manage everything themselves, you can choose self-directed traditional brokerage and retirement accounts where you pick all of your investments with no commissions for stock or ETF trades. These accounts have no fees and no minimum balance requirements. Schwab also offers a robo-adviser, Schwab Intelligent Portfolios, that can manage all of your investments for you for no added charge. But you’ll need at least $5,000 to use this account.
If you want to take automated investing a step further, you can upgrade to Schwab Intelligent Portfolios Premium. This account combines robo-advice with unlimited guidance from a certified financial planner . Note, however, that you’ll need a minimum of $25,000 to get started. The account has a $300 one-time planning fee and includes a $30 monthly fee.
Schwab is best for investors who want every potential investment need covered at a very low cost. Whatever your needs are in the future, odds are Schwab will have a solution that works for you.
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Best For Recession Proofing: Credit Suisse
Investors around the world often look to the Swiss currency as a safe haven when the U.S. dollar appears unstable. Swiss banks also have a reputation for professionalism and privacy when handling large financial transactions. One leader among Swiss banks is Credit Suisse, tracing its roots back to 1856.
What Are The Fees
I started with this one as it is probably the most important aspect to look for in your investment account.
What are the fees? What I mean is: account maintenance fees, index funds or mutual funds management fees, rollover fees, etc.
All financial institutions have some fees on their funds and accounts, your job is to eliminate ones with high fees. For me, anything 1% or higher in fees is not worth my time.
Imagine getting an average of 8% returns on your investments each year. And that you have 4 diverse mutual funds selected all over 1% in fees.
Your weighted average expense will be somewhere above 1% on your portfolio and now you are getting less than the 8% returns.
So it might not seem much, but expand that over 10, 20, 30+ years of compound interest and you are leaving thousands and thousands of dollars on the table.
Luckily, there are many options now of lower fees and funds that are under .5% in fees.
Related:Learn how to calculate your weight expense ratio for your portfolio.
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What Makes A Good Checking Account
A checking account should be inexpensive and easy to use. Monthly fees are particularly problematic because theyre easy to avoid, and they slowly drain your account. Overdraft charges and other fees can also add up to hundreds of dollars per year.
Be sure to choose a checking account with the services you need. Several features you might find valuable include:
- Online bill pay that allows you to schedule payments and make on-demand payments
- Remote or mobile check deposit
- The ability to link external accounts
- ATM fee reimbursements
- The option to lock your debit card when you dont plan to use it
- Official payments like cashiers checks and money orders
- Customer service by chat, phone, or mobile app to help when you need a hand
- ATMs that accept deposits
Other Brokerages We Considered
- Firstrade: Firstrade isn’t as well known as some others on this list, but it’s been around for decades and offers commission-free trades for most assets including no per-contract fee for options and no commissions for any mutual fund trades. The trading platform doesn’t feel as modern and polished as some competitors, but the price is right.
- Webull: Webull is also almost completely free to use there are no account fees or trading commissions. You can trade stocks, options, ETFs, and cryptocurrencies. But while it’s available account types include taxable investment accounts and IRAs, it doesn’t currently offer joint brokerage accounts, education savings accounts, or automated investing options.
- E-Trade: E-Trade is a major brokerage with a long history of serving online traders. It has a great web platform and works well for beginner to experienced traders. E-Trade is currently in the process of being acquired by Morgan Stanley.
- Interactive Brokers: Interactive Brokers is best for investors who are looking to become more active traders. It may be good for beginners looking to invest time to learn the markets and how higher-powered trading tools work.
- Merrill Edge: Merrill Edge is part of Bank of America. It does a good job of rewarding very loyal customers with high balances across Bank of America and Merill accounts. It’s less ideal for traders who don’t have a strong relationship with Bank of America.
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Determine The Type Of Brokerage Account You Need
What are your investment objectives? If you simply want to invest for a rainy day or for a certain relatively near-term goal, and don’t necessarily want your money tied up until you retire, a traditional brokerage account is the way to go. These accounts don’t have tax advantages — you may have to pay tax on investment profits and dividends — but you are free to withdraw your money whenever you’d like. For this reason, a traditional, or standard brokerage account is often referred to as a taxable brokerage account.
If you choose a traditional brokerage account, your broker will likely ask if you want a cash account or margin account. If you choose to apply for margin privileges, this basically means that you can borrow money to buy stocks, with the stocks in your portfolio serving as collateral. You’ll pay interest on the borrowed money, and there are some inherent risks involved with investing on margin that you should be aware of.
It’s also worth noting that many people choose to open multiple brokerage accounts — such as a taxable account and an IRA, in order to keep their money in separate baskets.
