How Do I Get There
The first three steps tells us your needs, the people, places and goals that matter most to you, your attitude toward risk, your progress toward your goals, and your current investment plans. All these factors not only help create a financial strategy, but also serve as the guiding principles to remind us why you’re investing and what you hope to achieve.
We’ll take all of this into consideration, along with the investment principles that guide us as a firm. Then we’ll find the investments, protection and services that will get you to where you want to be.
Its also important that you understand what these investments and services cost. Well walk you through any fees before you get started to make sure youre comfortable.
Investing In Stocks For Beginners
When you purchase individual stocks, you become a partial owner of the companys stock you purchased. That means when the company makes money, so do you, and when the company grows in value, the value of your stocks grows as well.
Investing in stocks is by far the most rewarding investment option since it allows you to profit from owning any publicly traded company that you wish to invest in.
Important: This is where value investing comes into play. Since youre investing in companies you already spend money on and believe in, it makes the process WAY more fun and interesting.
On average, the entire stock market grows at a rate of about 7% a year, but its possible to achieve much higher returns by investing in hand-selected individual companies.
What Is An Online Stock Trading Platform
An online stock trading platform allows you to buy and sell stocks from your computer or smartphone. Also known as brokerage accounts, these are offered by financial institutions.
Once you open an account, and deposit money, the account links you to other buyers and sellers on the stock and bond markets allowing you to trade stocks and bonds as well as other investment vehicles like ETFs.
While all brokerages allow customers to trade online these days some online stock trading platforms operate exclusively online, while others pair stock trading with traditional financial advisers who offer help and advice.
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What Other Resources Do You Need
While cost is an important factor in choosing a brokerage, youll also want to consider other traits that may improve your experience, such as:
- Research: How much research does the broker offer? Is it in-house work or from third parties? Do you need research on individual stocks or are you looking for funds?
- Education: Many brokers offer a ton of educational resources so you can understand how to invest effectively. Quite a few brokers offer articles and webinars on how to use their advanced products and tools, especially if youre looking to trade more often.
- Trading simulators: Some brokers offer trading simulators that give you a wad of virtual money and let you use the simulator to try out their platform and test your skills.
- Customer support: If youre just starting out, you may have a lot of questions, so good customer support can be vital. Check a brokers availability and see if it matches up with your needs.
- Mobile apps: If youre looking to trade via mobile, you may want to take a peek at the brokers app first. While some brokers are mobile-first and known for the quality of their app, almost all major online brokers offer an app that can get the job done.
Those are some of the major features that youll want to consider, but you may have other must-have features depending on your needs.
Why Commission Fees Matter
Here’s why trading commissions are so important: Say your broker charges a $6.99 commission for online stock trades and you have $1,000 to invest. You want to spread your money across a portfolio of five stocks.
To make your initial investments, you’ll pay nearly $35 in trading commissions. On a $1,000 investment, you’re effectively starting with a 3.5% loss in your portfolio.
Plus, you’ll pay another $6.99 each time you add to one of your stock positions. If you’re planning to build up your portfolio over time, it’s not hard to see how this can cost you thousands of dollars over the years.
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Know When To Buy Your Stocks
Succeeding in investing in individual stocks is all about choosing the right companies as well as the right time to invest in the stock market, but the right time wont last forever. Once a company on your watchlist goes on sale, its time to buy.
At this point, all you need to do is place your money in the company and keep it there for the long term. If you made a wise investment, your money will grow in value for many years after you invest your money it in the company.
Vanguard: Best Basic Free Stock And Etf Trades Stock Market App
- Available via desktop, Apple iOS and Android App on Google Play.
This list wouldnt be complete without the aptly-named company at the vanguard of fighting for the retail investor: Vanguard. The company has long sought to lower investing costs for retail investors by offering market index investments for increasingly affordable rates.
In fact, John Bogle originated the idea of index fund investing and first offered them to retail investors as mutual funds and eventually exchange traded funds .
These low-cost investments have saved retail investors billions of dollars over the years, allowing their brokerage account returns to compound further.
While apps like Robinhood have slashed trading commissions to $0, Vanguard has led index fund investors to virtually $0 fund expenses as well. When combined, you invest in the stock market for almost nothing.
Talk about a great accomplishment for the small investor looking to invest steadily over time.
Vanguard excels as a free stock trading platform when you wish to buy and sell Vanguard securities like index fund ETFs or mutual funds. You pay no commissions on their ETF products like VTI, or mutual funds like VTSAX and VFIAX.
Further, the company also recently announced it will no longer charge trading fees on competitors ETF trades as well. This marks a departure from the companys long-standing position of charging commissions on other investment firms ETF trades.
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How To Choose The Best Online Trading Platform For You
The three main things to consider when choosing an online trading platform are your investment experience and style, your trading needs, and your personal finance goals.
1. Investment experience and style
How long you have been trading or if youve ever traded at all is a big factor in the type of platform you should choose.
Beginners may want to start with a robo-advisor that automatically manages a diversified portfolio of stocks and bond investments for you. Those interested in learning to actively trade should look for platforms that offer basic educational resources, responsive customer support, and that allow them to practice trades before getting into the real thing. Experienced traders can benefit from platforms that let them issue specific types of trades, have more complex analytic tools, and allow them to start trading as soon as possible.
2. Trading needs
Day traders make numerous trades in the span of a single day, so they need a platform thats fast and reliable while having the lowest possible trading commissions. Meanwhile, investors who are aiming to pay for a trip or a gift may prioritize integration with their banking accounts to send their spare cash directly to savings.
Before you settle on an online trading platform, make sure it can accommodate your needs based on your trading habits.
3. Financial goals
What Kind Of Online Brokerage Should I Choose
There are a variety of accounts you can open with an online broker. If your goal is to save money that you wont need until retirement, then you may want to consider using a tax-advantaged account, such as an individual retirement account . If, on the other hand, your goal is to save for nearer-term goalssuch as a down payment on a housethen you may just want to use a taxable account that you can access at any time.
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Td Ameritrade: Best For Advanced Investors
- Minimum investment: $0 for basic, $2k for margin and option trading, $5k for robo-advisor
- Trade/account management fees: 0.30%
- Investment options: Stocks, options, ETFs, mutual funds, futures, forex, bonds, CDs
- Robo-advisor available? Yes, through Essential Portfolios
If you already consider yourself an intermediate or advanced trader, or would like to become more advanced, TD Ameritrade offers a massive toolkit for you to sharpen your skills.
Here are just a few examples of what Im talking about:
And the cost for all this? Nada, in most cases. No commissions, no trade fees, and TD Ameritrade even offers over 300 commission-free ETFs.
Top Five Best Investment Sites For Beginners
Now, lets get to the best investment sites in the game. The best time to kick start your journey as an investor is now. The competition between the best investment sites is intense currently. This had led to the prices coming down and the services and benefits advancing consistently.
There are many best investment sites out there with varying tools and advantages. What might work for someone may not work for you. So, keep an open mind, know your financial horizon, and keep reading to find the best investment sites for beginners.
Acorns Best For Hands
Acorns makes out our list for the top online stock brokers for beginners. The firm helps investors round up purchases and invest the change into your portfolio. The broker offers a selection of options and robo-advisors that help newbies get started on mastering the creation of a profitable portfolio over time.
- Great for newbies that dont want to go head first into risky situations and want to earn a profit through their savings.
- Easy-to-use, simple and customizable tools
- The firms targets Passive investors but they also allow you to take out lump sums and set up automatic deposits.
- Automated investments in ETFs, based on your recommendations from your personal information.
- All tools and resources are available on their mobile app
- Acorns charges commission fees, including an initial $5 to open an account and a $3 monthly fee.
- Not a great range of investment products
We believe Acorn deserves a spot on this list because they are highly rated by nearly all their customers, ourselves included as you can see in our Acorns review. The brokers fees however, are not looked favorably upon since the industry move towards lower fees in October 2019.
Investors should just keep in mind that passive investing takes a while to accrue a profit, and Acorns does charge fees that may not allow them to make gains as fast as possible with passive investing.
Best Investment Accounts For Young Investors
Modified date: Aug. 29, 2022
Investing can feel intimidating.
And if youre feeling nervous, thats OK. It means youre mindful of the risks and are approaching the markets with caution.
That being said, theres never been a better time to get started investing. Todays brokers and robo-advisors are making it easier than ever for young folks like us to invest confidently with almost any amount of money.
Whether you want to start investing as little as $25 a month or have a windfall of $10k youre looking to manage, the right account is just a few clicks away. And were here to help you determine which one is right for you so you can take the most important step on your journey to early financial independence: investing your first capital.
But before we get started, some quick FYIs: unless otherwise noted, you can open either a standard, taxable investing account or an Individual Retirement Account with any of these platforms.
Also, if you need a quick refresher on what terms like robo-advisor and brokerage mean, check out our FAQs at the bottom of this article.
Now, lets investigate the best investment accounts for young investors!
What Is The Difference Between Trading And Investing
Investing means buying and holding securities like stocks, bonds and ETFs to maximize returns in the long run. Traders frequently buy and sell stocks to earn strong returns in the short term.
An investor may build a diversified portfolio with stocks, bonds, funds and alternative assets to meet a long-term goal like saving for retirement. They focus on portfolios that have the potential for long-term growth and provide them with exposure to the broader market. Investors may ride out market downturns because they believe theyll recover losses and earn gains when the market rebounds.
A trader pays close attention to market movements hoping to find opportunities to profit. Traders often seek so-called undervalued stocks they believe are priced below what theyre actually worth in order to profit when the market reflects the stock’s true value.
Trading is risky, however, as even most professional investors fail outperform the returns of passive investments like index funds which aim to deliver returns of the stock market as a whole. A study by the financial services and research firm Morningstar showed that in the decade ending in 2019, only 23% of active managers were able to outperform their passive peers.
Fixed Income & Bond Investing We Can Work With You To Integrate Bonds And Cds Into Your Investment Approach With Strategies Designed To Preserve Wealth Generate Income And Potentially Manage Taxes
You’ll have access to a team of fixed income specialists who can help you develop a bond strategy around your full financial picture, proactively alerting you when new bond issues that meet your unique goals become available.
With access to over 75,000 individual taxable and municipal bonds and CDs and online analytical tools, we have the building blocks to help you construct a tailored portfolio to meet virtually any need.
Our transparent pricing allows you to see what you’ll pay before you trade and our low-cost executions could potentially save you up to $15 per bond.*
The Best Free Stock Trading App Platforms For Beginners
In the last decade, trading apps have become far simpler and easy to use for investors. While certainly a boon to many, this can also encourage trading more than previous brokerages.
Being able to trade without fees, starting with a small amount of money , from the convenience of your smartphone makes stock trading accessible to more people than ever before.
This cuts both ways. As a result, I always espouse a passive investing strategy in low-cost, diversified index funds.
The trading platforms above all allow stock and ETF trades at a minimum, the best investment options for beginning investors looking to trade for the first time on powerful mobile app services.
Fortunately, many of the best stock trading apps for beginners allow for both active and passive investing styles. As you mature as an investor, youll want investment apps that can meet your needs.
Choose one or more stock apps mentioned above to start investing in your future. See which one works best for you.
As you develop your investing experience and skillset, you might upgrade to other brokers who offer stock futures trading, forwards or day trading. However, plain vanilla stock investing is also a great idea if you follow the keep it simple, stupid motto.
About the Author
Riley holds a Masters of Science in Applied Economics and Demography from Pennsylvania State University, Bachelor of Arts in Economics and a Bachelor of Science in Business Administration and Finance from Centenary College of Louisiana.
Discount Brokerage Vs Full
There are two types of stock brokers: a full-service brokerage and a discount brokerage.
A full-service broker will buy and sell securities for an investor, but theyll also provide a variety of other financial services. These services may include:
Investment advice: The stock broker advises the investor on which securities to buy or avoid.
Portfolio management: The stock broker helps the investor build a diverse portfolio to build wealth and mitigate risk.
Performance analysis: The stock broker analyzes the performance of the investors securities and makes recommendations on how to improve them.
Tax planning: The stock broker helps the investor maximize his or her tax savings.
Wealth management: The stock broker helps the investor manage his or her assets.
In the past, only wealthier investors had access to stock brokers, but the internet has made brokerage services more accessible than ever. Most online stock brokers are discount brokers.
A discount broker is a broker who buys and sells securities for an investor but for a discounted commission. Discount brokers do not offer any investment advice or financial services for an investor, and thats why their commission fees are lower.
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Best Online Investment Sites For Beginners
In addition to checking out Rule #1 Investing for new videos, blog updates, and more, there are plenty of other great investing websites that you can use to stay up to date on the market and learn more about how to invest. Some sites that I follow and use regularly include Barrons, Seeking Alpha, and Wall Street Journal.
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What Are The Best Stock Trading Apps For Beginners
In truth, no one app serves every individual persons needs the same. Some investors choose to follow a more active approach while others would rather a set-it-and-forget style.
While I espouse the latter more so on this site, I dont necessarily think investing in individual stocks is a bad approach when using research and analysis to guide your decision-making.
In fact, stock advisor services like the Motley Fools Stock Advisor and Rule Breakers have shown tremendous outperformance over the last two decades and really represent a significant value for investors looking to rely on others for making stock picks.
Some stock newsletters may even want to practice a more active form of trading and get vetted stock alerts sent directly to their phones to take advantage of market movements.
As long as you account for your risk preferences and level of commitment to following the market, your investment choices will depend on you.
No matter your investing style, when you want to get started investing, you want to look for apps that provide the functionality you want without feeling overwhelmed.
Therefore, the best stock trading app for you depends on your experience, trading goals, and desired level of educational support.
Beginners benefit from apps that have the least amount of fees and a lot of charts, quotes and educational stock research sites. But they also dont want to get lost in all this distraction if they cant make sense of the information provided.
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