An investing writer for NerdWallet reveals the personal finance website’s current selections for top online brokers. The views expressed is this article are that of NerdWallet and not the American Association of Individual Investors (AAII).

If you want to invest, you need a brokerage account. A brokerage account can allow you to buy and sell everything from stocks and bonds to mutual funds, currencies, and futures and options contracts, depending on the broker. Over the long term, the return on a diversified investment portfolio should be much greater than a savings account interest rate, which likely won’t beat inflation.

If you’ve never had a brokerage account, be aware of these key differences from savings accounts:

• Savings accounts don’t offer you access to investments; instead, you earn an interest rate on money deposited.
• The money in a savings account is insured by the Federal Deposit Insurance Corp. for up to $250,000 per depositor, per insured bank. FDIC coverage does not insure investments, including stocks, bonds and mutual funds. Brokerage accounts carry a different kind of coverage, from the Securities Investor Protection Corp. This coverage protects customers if an SIPC-member broker fails, but it doesn’t protect against investment losses. SIPC coverage is up to $500,000 per customer, per institution, with a $250,000 limit on cash.

Know Your Priorities

You’ll likely want to go with an online broker; choosing the right one depends on your priorities. Some investors are willing to pay higher trade commissions for a state-of-the-art platform; others only care about keeping costs down. Settling on the best option for you means weighing the following factors, which vary from broker to broker:

• Account minimums: How much you have to invest may slim down your choices. Initial deposit requirements at online brokers can skew toward $1,000 or more. This is by design, for a few reasons. It’s hard for brokerage firms to make money off small accounts. For your part, the less money you have to invest, the harder it is to achieve proper diversification. But it’s entirely possible to find highly ranked brokers with no account minimum.
• Investment choices and commissions: Online brokers will offer a range of investments, including individual stocks, options, mutual funds, exchange-traded funds (ETFs) and bonds. Some brokerage firms also offer access to futures trading and forex (currency) trading. The investments that the broker offers will have two implications: whether your investment needs will be satisfied and how much you’ll pay in commissions. Prioritize low commissions on the investments you’ll use most.
• Account fees: Most brokers will charge a fee for transferring funds out of or closing your account. If you’re transferring to another broker, that new company may offer to reimburse your transfer fees, at least up to a limit. Common fees to watch out for are annual fees, inactivity fees, extra charges for broker-assisted trades, trading platform fees, extra charges for research and data, and paper statement fees.
• Compatibility with your trading style and tech needs: If you’re a beginner investor, you may not plan to trade frequently. In that case, you should avoid brokers that charge an inactivity fee if you don’t meet a minimum number of trades per month, quarter or year. Active traders, on the other hand, will want to look for a brokerage that supports that kind of frequency. That includes weighing a broker’s trading platforms, analysis tools, research and data offerings in addition to commissions—including discounts for high-volume traders—and fees.

For more information on choosing a broker, check out NerdWallet’s article “How to choose the best online broker for me.”

NerdWallet’s investing team has spent hundreds of hours researching and comparing brokerages. Our goal is to assess each online broker in the categories that are most important for investors, such as management costs and fees, platforms, and customer service. Here’s a summary of our 2016 picks:

Best for Research

Investors rely on research, and they’ll find a breadth of it at Merrill Edge and Fidelity. Fidelity supplies research from more than 20 providers, while Merrill Edge hits all the high notes: Morningstar, S&P Capital IQ and Recognia, with mutual fund reviews from Morningstar and Lipper. Commissions at the two brokers are competitive, and research offerings are free.

Merrill Edge

Merrill Edge combines high-quality customer service with low commissions and fees—including a limited number of commission-free trades to customers who meet minimum balance requirements. The company provides research from its own BofA Merrill Lynch Global Research, as well as third-party providers Morningstar, S&P Capital IQ and Recognia. Mutual fund reviews and rankings come from both Morningstar and Lipper, and the website compiles a list of Merrill Edge Select ETFs and Merrill Edge Select Funds, showing the top funds in each category as evaluated by Merrill Lynch investment professionals.

• Trade commission: $6.95 per stock trade. Customers who maintain combined balances of $25,000 or more in Bank of America deposit accounts or combined balances of $25,000 or more in Merrill Edge self-directed accounts can qualify for up to 30 commission-free trades per month.
• Account minimum: $0.
• Account fees: No annual or inactivity fees; $49.95 full outgoing account transfer.
• Trading platform: Online trading platform; Merrill Edge MarketPro available to customers who maintain a balance of $50,000 or more or make at least 15 trades per quarter.
• Mobile app: Average capabilities.
• Mutual funds: Over 5,000 no-transaction-fee mutual funds.
• Commission-free ETFs: None.
• Research and data: Free and extensive.
• Customer support: Phone support 24/7; live chat and email support. Investors can meet with a Merrill Edge Financial Solutions Advisor at over 2,000 Bank of America locations.
• Tradable securities: stocks, bonds, mutual funds, ETFs, and options.

Click here to read NerdWallet’s full review of Merrill Edge.

Fidelity

Many people associate Fidelity Investments with retirement and 401(k) accounts, but it’s perhaps less frequently considered as an online broker for regular traders. That’s a mistake, because the company has fair midrange commissions, a wide investment selection, strong customer service and an impressive amount of research. The company offers research from more than 20 providers, including Recognia, Ned Davis, S&P Capital IQ and McLean Capital Management. The downside: Fidelity’s active trader platforms have trade minimums, and the company’s account minimum is on the high side.

• Trade commission: $7.95 per stock trade.
• Account minimum: $2,500 for brokerage accounts; $0 for IRAs.
• Account fees: No annual or inactivity fee; $50 account closing fee.
• Trading platform: Online trading platform; Active Trader Pro for desktop and browser is available to customers who trade at least 36 times in a rolling 12-month period.
• Mobile app: Advanced features mimic a desktop trading platform.
• Mutual funds: More than 3,600 no-transaction-fee mutual funds.
• Commission-free ETFs: 98 commission-free ETFs.
• Research and data: Free and extensive.
• Customer support: Phone support 24/7; live chat and email support.
• Tradable securities: stocks, bonds, mutual funds, ETFs, options, and forex.

Click here to read NerdWallet’s full review of Fidelity.

Best for Investment Selection

E*Trade and OptionsXpress support the trading of multiple asset types. No matter what you want, these two brokers probably have it: Both offer stocks, bonds, ETFs, mutual funds, futures and options trading via robust trading platforms. Costs vary depending on your investment choice: E*Trade wins on futures trading costs, but OptionsXpress has a slightly lower commission for stock and ETF trades. E*Trade offers a list of no-transaction-fee mutual funds. OptionsXpress doesn’t offer any mutual funds free of transaction fees, but clients have access to parent company Charles Schwab’s extensive list of commission-free ETFs.

E*Trade

E*Trade has long been one of the most popular online brokers, largely because of its easy-to-navigate online experience on both its website and mobile app. The company offers a tiered commission structure that favors frequent traders but can add up to high costs for casual investors.

• Trade commission: $9.99 for fewer than 150 trades per quarter; volume discounts available.
• Account minimum: $500 for brokerage accounts; $0 for IRAs.
• Account fees: No annual or inactivity fee; $60 full transfer out fee.
• Trading platform: E*Trade 360 for browser; desktop platform E*Trade Pro for customers who maintain at least a $250,000 account balance or execute at least 30 stock or options trades per quarter.
• Mobile app: Advanced features mimic a desktop trading platform.
• Mutual funds: Over 1,300 no-transaction-fee mutual funds.
• Commission-free ETFs: Over 100 commission-free ETFs.
• Research and data: Free and extensive.
• Customer support: Phone support 24/7; email support and live chat.
• Tradable securities: stocks, bonds, mutual funds, ETFs, options, and futures.

Click here to read NerdWallet’s full review of E*Trade.

OptionsXpress

Charles Schwab purchased OptionsXpress in 2011 to beef up the broker’s options trading capabilities. It is geared toward frequent options traders, with significant volume discounts and advanced options trading tools. The company serves that purpose well but likely won’t appeal to casual investors.

• Trade commission: $8.95 per stock trade.
• Account minimum: $0.
• Account fees: No annual or inactivity fees; $60 full outgoing account transfer; $50 IRA closing fee.
• Trading platform: Two platforms offered with no trade minimums or fees.
• Mobile app: Above-average capabilities.
• Mutual funds: $9.95 per trade; no transaction-fee-free mutual funds.
• Commission-free ETFs: Access to more than 200 Schwab commission-free ETFs.
• Research and data: Free.
• Customer support: Phone support Monday-Friday 9 a.m. to 8 p.m. Eastern; live chat and email support.
• Tradable securities: stocks, bonds, mutual funds, ETFs, options, futures.

Click here to read NerdWallet’s full review of OptionsXpress.

Best for Low Cost

Investors seeking a no-frills platform to execute stock and ETF trades will find that the Robinhood investing app and Loyal3 website and mobile app provide easy entree, with $0 account minimums.

However, these services don’t include the support you’ll find on other trade platforms, such as research reports or analysis software. For investors who want more, TradeKing and Interactive Brokers prove that it’s possible to pair low commissions with advanced features. Both companies score high for their trading platforms and investment selection. TradeKing falls a bit short by not offering futures trading, but the broker has a $0 minimum deposit requirement and lower inactivity fees compared with Interactive Brokers. Frequent traders will pay less in commissions at Interactive Brokers. It offers volume discounts but requires traders to meet monthly activity minimums and maintain a $10,000 balance.

TradeKing

TradeKing may be a deep-discount broker—indeed, it’s one of our top low-cost options—but its robust trading platform and lineup of free research, charting, data and analytical tools puts it in line with some of its more well-known, and higher-priced, active trading competition.

• Trade commission: $4.95 per stock trade.
• Account minimum: $0.
• Account fees: $50 annual inactivity fee for customers who don’t place at least one trade per year or maintain a balance of $2,500; $50 outgoing transfer or IRA closing fee.
• Trading platform: Browser-based platform with free screening tools, customizable charting, research and real-time data.
• Mobile app: Mobile website available.
• Mutual funds: $9.95 per trade; no transaction-fee-free mutual funds.
• Commission-free ETFs: None.
• Research and data: Free.
• Customer support: Phone support 8 a.m.-6 p.m. Eastern, Monday-Friday; live chat and email support.
• Tradable securities: stocks, bonds, mutual funds, ETFs, options, forex.

Click here to read NerdWallet’s full review of TradeKing.

Interactive Brokers

Interactive Brokers is known for its international trade capabilities, low commissions and advanced trading platform. The broker is a favorite among active, advanced traders. However, its high minimum investment requirement and inactivity fees will turn off beginners.

• Trade commission: $0.005 per share; minimum $1 and maximum 0.5% of trade value; volume discount available.
• Account minimum $10,000; $5,000 for IRAs; $3,000 for clients 25 or younger.
• Account fees: Monthly inactivity fees range from $3 to $20.
• Trading platform: Extensive tools for advanced traders in the Trader Workstation platform.
• Mobile app: Strong mobile trading app.
• Mutual funds: More than 1,700 no-transaction-fee mutual funds.
• Commission-free ETFs: More than 50 commission-free ETFs.
• Research and data: Yes; additional charges for premium features.
• Customer support: Phone support Monday-Friday 8 a.m.-8 p.m., Sunday 1-7 p.m. Eastern time; live chat and email support.
• Tradable securities: stocks, bonds, mutual funds, ETFs, options, futures, and forex.

Click here to read NerdWallet’s full review of Interactive Brokers.

Best Overall

TD Ameritrade and OptionsHouse have no inactivity fees or account minimums. They offer solid trading platforms, a variety of research tools and access to a large selection of investments. If you’re looking for high-quality customer support, innovative and user-friendly trading platforms and deep research, TD Ameritrade and OptionsHouse are both strong choices.

TD Ameritrade

TD Ameritrade can make everyone from beginner investors to active traders happy with its better than-average-service, research and trading tools. Its major shortfall is its higher-than-average trading commissions, but its service and account features are more than sufficient for most retail investors, and the barrier of entry for beginners is low with a $0 minimum deposit. Whether you’re looking to open an IRA after maxing out your 401(k) at work or you’re interested in trading in a taxable account, TD Ameritrade should be on your list of online brokers to consider.

• Trade commission: $9.99 per stock trade.
• Account minimum: $0.
• Account fees: No annual or inactivity fee; $75 outgoing transfer fee.
• Trading platform: Two robust platform choices accessible to all customers: Thinkorswim and Trade Architect.
• Mobile app: Mirrors the desktop and web platforms.
• Mutual funds: More than 2,000 no-transaction-fee mutual funds.
• Commission-free ETFs: More than 100 commission-free ETFs.
• Research and data: Free and extensive.
• Customer support: 24/7 phone support; live chat and email support.
• Tradable securities: stocks, bonds, mutual funds, ETFs, options, futures, and forex.

Click here to read NerdWallet’s full review of TD Ameritrade.

OptionsHouse

OptionsHouse’s low-cost commissions ($4.95 a trade for stocks and options) and $0 minimum to open and maintain an account (no inactivity fees here!) are certainly noteworthy among the discount brokers that NerdWallet reviews. But the fact that OptionsHouse, as its name makes clear, is a full-service platform for options traders, offering sophisticated trading tools and fast trade execution for rock-bottom pricing, is why it earned the highest overall rating we award.

• Trade commission: $4.95 per stock trade.
• Account minimum: $0.
• Account fees: $60 IRA closing fee; $75 outgoing transfer fee.
• Trading platform: Browser-based platform with free customizable tools and real-time data.
• Mobile app: Yes.
• Mutual funds: No transaction-fee-free mutual funds; $20 per trade.
• Commission-free ETFs: None.
• Research and data: Free real-time market quotes with $100 minimum account balance.
• Customer support: Phone support 8 a.m. to 7 p.m. Eastern weekdays; live chat and email support.
• Tradable securities: stocks, bonds, mutual funds, ETFs, options, and futures.

Click here to read NerdWallet’s full review of OptionsHouse.

For More on NerdWallet

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