Best Discount Brokers: Which Online Brokerage Is Right for You?

If you prefer to manage your own investments, the easiest way is through a discount broker, also called an online broker. You can buy and sell stocks, bonds, mutual funds, ETFs; you name it. There are several account options, and because you’re placing the trades, you benefit from low fees.

The best discount brokers can provide free stock trades and have robust research capabilities. Several also offer fractional investing to avoid having uninvested cash. You can use these brokerages for long-term investments and avoid the frustrations of trendy investing apps. In this article, I share our list of the best discount brokerages and let you know what makes each one stand out.

Table of Contents
  1. Best Discount Brokers
    1. Fidelity: Best Overall
    2. Interactive Brokers: Best for Advanced Traders
    3. Schwab: Best for Customer Service and Banking
    4. E*TRADE: Best For Options and Mobile App Investing
    5. Ally Invest: Best For Researching Stocks
    6. Merrill Edge: Best For Bank of America customers
    7. SoFi Invest: Best For Earning Investment Rewards
    8. Vanguard: Best For Passive Investing
    9. TradeStation: Best For Technical Traders
    10. WeBull: Best for Paper Trading
    11. Robinhood: Best for Investing Small Amounts
  2. Best Discount Brokerages: Final Thoughts

Best Discount Brokers

While you can’t go wrong with any of these investment platforms, each has its specialty. Before you open an account, you should always compare the platform layout, research tools, and in-house investment options to make sure they’re right for you.

Fidelity: Best Overall

There’s not much to dislike about Fidelity Investments; they offer everything you need for investing, including account options and research tools. The company also provides less-common products like custodial accounts and cash management accounts. 

Casual investors will have everything they need with the standard web or mobile platform, but there are also specialized services for frequent traders (Active Trader Pro) and new investors (Fidelity Spire).

Fidelity® ZERO index funds have no expense ratios and only require a $1 minimum investment. Additionally, you can buy fractional shares of stocks and ETFs with as little as $1 through the Stocks by the Slice feature. Unfortunately, this feature is only available through the Fidelity mobile app.

Why We Like Fidelity

  • Zero-fee index funds
  • Fractional shares as low as $1 (mobile trading-only)
  • Multiple investment platforms

Find out more about the latest Fidelity Investments Promotions.

Interactive Brokers: Best for Advanced Traders

Interactive Brokers offers two different platforms for retail investors and frequent traders.

IBKR Lite offers commission-free stocks and ETFs and is best for casual and long-term investors. The research tools include paper trading, a fundamentals explorer, algorithmic trading, and mutual fund screeners. Fractional investing as low as $1 is available as well.

Investors can also participate in the Stock Yield Enhancement Program. This feature pays up to 50% of the income earned if you lend shares in your portfolio. 

High-frequency traders can benefit from the IBKR Pro plan, which offers advanced routing options and backtesting. The trading commissions start at $0.0035 per share, but your trading fees can be lower if you have a high volume. 

Why We Like Interactive Brokers

  • Customizable trading tools
  • Paper trading and backtesting
  • Can earn interest by lending shares
  • $1 fractional investing

Schwab: Best for Customer Service and Banking

Charles Schwab usually gains kudos for its hands-on customer service, which is available 24/7 by phone, chat, or email. The platform also has a unique investment platform for all your investing needs, and you can also open a free interest-bearing checking account. 

You can buy stock slices with a minimum $5 investment of stocks within the S&P 500. The discount broker also offers index funds with a minimum investment of $100 or less.

While most trades are free, OTC stocks and funds have a $6.95 commission.

The platform also gives you access to interactive stock charts and many third-party analyst reports. As a result, consider this service if you crave in-depth research.

Why We Like Schwab

  • $5 fractional investing for S&P 500 stocks
  • Advanced charting and analyst reports
  • Investment and banking accounts
  • 24/7 customer support

E*TRADE: Best For Options and Mobile App Investing

E*TRADE can be a good fit for investors of any experience level. It has one of the most impressive mobile apps for investors and a robust web version. 

Most investors will be happy with the standard E*TRADE web or mobile platform. Investors can easily research stocks with third-party reports. Investors can also test options chains and open a free checking account to quickly transfer funds and write checks.

Advanced investors can benefit more from the Power E*TRADE site or app. This platform offers advanced charting tools with over 145 studies, and it can automatically identify technical patterns. Paper trading is also available.

This discount broker can also be one of the better options for trading options as you can access screeners, back testers, and analyzers – free of charge. Placing at least 30 trades per quarter also reduces the options trading commissions from $0.65 per contract to $0.50.

These various tools and affordable commissions make this an excellent platform for penny stock investing alongside your regular holdings.

Newer investors and those looking to learn new strategies can benefit from the expansive education library of videos.

One potential downside of this brokerage is not having fractional investing.

Why We Like E*TRADE

  • In-depth charting tools
  • Paper trading simulator
  • Options trading tools

Ally Invest: Best For Researching Stocks

Ally Invest can be a natural fit if you’re an Ally Bank customer, as you can easily integrate your accounts and enjoy the best banking and investing features.

You can trade stocks and ETFs commission-free. Bonds ($1 per bond) and options ($0.50 per contract) also have competitive pricing. However, it costs $9.95 to trade no-load mutual funds.

While most discount brokers offer “robo-advisor” managed accounts, many incur an annual advisory fee. But the Ally Invest Robo Portfolios waive the 0.30% annual fee when you maintain a minimum 30% cash buffer. 

Going back to self-directed trading accounts, Ally Invest offers various research tools to compare stocks, ETFs, and options. For example, you can use the profit/loss and probability calculators to evaluate potential trades.

Unfortunately, fractional investing isn’t available.

The brokerage also offers a wealth management service when you have at least $100,000 in investable assets. This service provides financial advisor access, but you will pay a maximum 0.85% annual fee and transition to a managed portfolio.

Why We Like Ally Invest

  • Excellent research tools
  • Fee-free robo-portfolios
  • Can integrate with Ally Bank accounts

Read our Ally Invest review for more information, or check out the latest Ally Bank and Ally Invest promotions.

Merrill Edge: Best For Bank of America customers

Merrill Edge can be a good fit for most investors, especially for Bank of America customers. The reason why is that your investment balances can help you qualify for the Preferred Rewards program.

Some of the Preferred Rewards perks include waived BofA service fees, loan discounts, and a 0.05% annual fee discount for Merrill Guided Investing accounts.

For a Merrill Edge Self-Direct account, you can open taxable or retirement accounts, including a Roth IRA. No account minimums apply to either account type.

You can trade stocks, ETFs, and options commission-free (besides $0.65 per options contract) but can only buy whole shares. 

The research tools are worth a look as you can review analyst opinions and company data provided by FactSet, a leading investment research tool. Investors also get complimentary access to BofA Global Research Ratings, a highly respected platform.

The web and mobile platforms are also easy to navigate and can provide more features than many stock trading apps.

Advanced investors can build a customized trading dashboard with the free Merrill Edge MarketPro® feature. This dashboard lets you save up to 25 personalized layouts and 26 expandable screens. 

The brokerage doesn’t offer mutual funds and bonds, which will deter some investors. 

Robo-advisor and advisor-led investing services are also available with different account minimums and annual advisory fees.

Why We Like Merrill Edge

  • In-depth research tools
  • Customizable trading dashboard
  • Can be eligible for Bank of America Preferred Rewards

SoFi Invest: Best For Earning Investment Rewards

SoFi Invest offers $5 fractional shares for stocks and ETFs through taxable and retirement accounts. However, unlike many of the best discount brokers, you won’t be able to trade mutual funds or individual bonds. 

It also doesn’t have the most extensive research tools, but you can access a historical price chart and webinars to learn more about investing.

The platform also provides several in-house ETFs that can be different than your run-of-the-mill fyou’reor example, you can earn receive weekly dividends (WKLY), weekly income (TGIF) or get exposure to the 50 most widely-held stocks on SoFi (SFYF).

You may like this platform if you’re a beginner investor and want a simple interface or are a SoFi member. 

You can earn SoFi points for logging into your account and completing other activities. In addition, redeeming these member rewards for fractional shares in your Active Invest account is possible.  

Your SoFi membership can help you qualify for rate discounts on future loan requests. Other member benefits include personalized financial advice from credentialed advisors and access to exclusive events. 

Get a $25 bonus cash when you deposit at least $100 through this link and check out the latest SoFi promotions. There are no deposit minimums to invest.

Why We Like SoFi Invest

  • Redeem rewards for fractional shares
  • Fractional investing as low as $5
  • Weekly payment ETFs

Vanguard: Best For Passive Investing

Vanguard is famous for its loyal community that uses its passive index funds. However, the brokerage also offers commission-free trading on most stocks and ETFs if you want to participate in active investing. Trading fees can still apply to leverage and inverse ETFs.

You may primarily consider this broker if you want to invest in the best Vanguard funds. You can get exposure to the major stock and bond indexes with competitive expense ratios. However, you may need to initially invest at least $3,000 to open a mutual fund position.

Consider the Admiral shares class for reduced expense ratios if you prefer mutual fund investing.

The research tools for individual stocks and funds aren’t the strongest for a legacy broker, but they can get the job done. You can perform technical analysis with interactive charts and also use fundamental analysis.

Fractional investing isn’t offered, so the investment minimums can be higher for ETFs. 

While this brokerage isn’t the best option for active traders, the brokerage provides accounts for the entire family. Taxable, retirement, and custodial accounts are available, and you can switch to managed accounts as your investment portfolio grows.

Why We Like Vanguard

  • Extensive passive investment offerings
  • Commission-free stocks and ETFs
  • Many personal account options

Comparison: Vanguard vs. Fidelity

TradeStation: Best For Technical Traders

Frequent traders can benefit from TradeStation, which lets you trade the first 10,000 shares per trade for stocks and ETFs commission-free. After that, each additional share can cost $0.005 per trade.

You will need to maintain a $2,000 average end-of-month balance or complete at least five trades per 12-month period to waive the $50 account inactivity fee. Two additional non-negotiable annual fees to be aware of include $35 for IRAs and $100 for crypto accounts.

Most other brokerages on this list offer retirement and crypto accounts, so you may choose them to avoid account charges. However, the research and trading tools may not be as robust for volume traders.

For instance, you can access daily stock data going back 50 years. A trading simulator can also back-test stock, options, and futures trading strategies. 

You can trade through a desktop, web, or mobile platform. 

Why We Like TradeStation

  • Unlimited paper trading and backtesting
  • Extensive market data library
  • Web, mobile, and desktop platforms

WeBull: Best for Paper Trading

WeBull provides free access to paper trading, interactive charts, and a desktop platform. Additionally, you can access Nasdaq TotalView Level 2 Data for an extra fee, although the first three months can be free. 

Traders and long-term investors that wish to hold stocks and ETFs may enjoy this online brokerage because of the research tools. Fractional investing is available with $5 stock slices to invest small amounts of money.

There are no account minimums to open a brokerage account. It’s also possible to receive up to six free stocks when making a qualifying deposit. 

While this brokerage has many research tools to help advanced traders, it doesn’t have as many investment options or similar customer support as legacy brokers like Fidelity and Schwab. 

However, it can be worth a look if you’re eligible for the stock promotions and like the other investing tools.

Why We Like WeBull

  • $5 fractional investing
  • Paper trading
  • Desktop platform
  • Interactive charts

Learn more in our WeBull review.

Robinhood: Best for Investing Small Amounts

Investors may have a love-hate relationship with Robinhood as the service was a catalyst for ushering in commission-free trading and other investing app innovations.

in my opinion, the best reason to use Robinhood is having the ability to buy fractional shares as small as $1 for stocks and ETFs. The app and desktop platforms are also straightforward and work well for buying and selling stocks and trading options.

Unfortunately, the platform has minimal research tools and doesn’t offer tax-advantaged retirement accounts. Also, you can’t invest in bonds and mutual funds like a full-fledged discount broker. Learn more in our Robinhood App review.

Why We Like Robinhood

  • $1 fractional investing
  • Easy to use (although it can be too easy for inexperienced investors)
  • Get one free stock when you join

Best Discount Brokerages: Final Thoughts

Using one of the best discount brokers provides more benefits than commission-free trades. You can access advanced research tools and quality customer service without account fees or minimum balance requirements. A few years ago, these premium features were harder to access.

While there isn’t necessarily a wrong choice on this list, the best brokerage depends on which investment options, research tools, and portfolio types you want. Qualifying for a brokerage bonus can also make the decision process much easier.

Other Posts You May Enjoy:

Best Solo 401(k) Providers

A solo 401(k) is a retirement savings plan for self-employed people with no full-time employees. It allows them to save for retirement using pre-tax contributions while benefiting from the same tax advantages in regular 401(k) plans. Here are some of the top solo 401(k) providers available today.

Is Robinhood Gold Worth It?

Robinhood Gold is a $75 per year premium subscription service to Robinhood. It unlocks a few perks but are they worth the annual fee?

Robinhood App Review 2024 – Free Stock, ETF, and Crypto Trades

Robinhood is a popular online broker offering free stock, ETF, crypto, and options trading. They also offer fractional trades, with no account minimums. But the platform doesn't support some investment types and has limited research tools. Is it worth it? Find out in this Robinhood review.

About Josh Patoka

After graduating in $50k with student loans in May 2008 from Virginia Military Institute with a B.A. International Studies and Political Science with a minor in Spanish (he studied abroad in Sevilla, Spain for 3 months), Josh decided to sell his soul for seven years by working in the transportation industry to get out of debt ASAP and focus on doing something else with a better work-life balance.

He is a father of three and has been writing about (almost) everything personal finance since 2015. You can also find him at his own blog Money Buffalo where he shares his personal experience of becoming debt-free (twice) and taking a 50%+ pay cut when he changed careers.

Today, Josh relishes the flexibility of being self-employed and debt-free and encourages others to pursue their dreams. Josh enjoys spending his free time reading books and spending time with his wife and three children.

Opinions expressed here are the author's alone, not those of any bank or financial institution. This content has not been reviewed, approved or otherwise endorsed by any of these entities.

As Seen In: