- Commission: $0 per trade
- Account minimum: $0
- An easy way to bypass the middleman and invest as little as $10 directly in well-known stocks.
Investors seeking a no-frills platform to execute stock and ETF trades will find that the Robinhood investing app and Loyal3 site and mobile app provide easy entree.
Robinhood offers commission-free trading of more than 5, 000 equities and ETFs. Loyal3, through its partnership with companies that offer direct investing programs, has a much more limited lineup of 70 well-known companies such as Apple, Starbucks, Tesla, Target, Netflix, Walt Disney and Facebook. However, it also has two features worth noting: access to IPOs for as little as $100 and the ability to purchase fractional shares for as little as $10. (Robinhood requires a minimum of one share to purchase.)
What you don’t get for your $0 on these bare-bones platforms are the standard features most full-fledged brokerages offer, such as access to mutual funds, research reports, analysis software and automatic reinvestment of dividends (dividends are paid as cash back into your account). Also important to note is that Robinhood and Loyal3 support only individual taxable accounts and not IRAs.
Best online brokers for free ETF trading
These choices have a large variety of commission-free exchange-traded funds.
- Commission: $8.95 per trade
- Account minimum: $1, 000 (waived with $100 a month auto-deposit)
- Promotion: 500 commission-free online trades
- Commission: $9.99 per trade
- Promotion: Up to $600 cash bonus
Exchange-traded funds are a great low-cost way for investors to build a diversified portfolio, because the expense ratios on these index investments tend to be lower than those charged by actively managed mutual funds. The savings get even sweeter when investors can purchase ETF shares without having to pay a commission.
Many brokers offer commission-free ETFs, but TD Ameritrade and Charles Schwab stand out for the number offered — more than 100 at TD and 200-plus at Schwab — as well as the quality of the available ETFs.
TD Ameritrade’s ETF lineup is curated by investment research company Morningstar, which is highly regarded in the industry for its mutual fund and ETF ratings The standout feature at Schwab is its ETF Portfolio Builder, which helps investors create a diversified ETF portfolio based on risk tolerance.
While there’s no minimum account balance requirement to get started at TD Ameritrade (which is why it’s high on the list of recommendations when you search our online broker comparison tool with ETF investing as main criterion), don’t let Schwab’s $1, 000 minimum scare you off. The broker will waive the requirement on many of its accounts for customers who sign up for a $100 monthly minimum auto-deposit.
Best online brokers for no-transaction-fee mutual funds
Commissions to buy mutual funds can be brutal, but these brokers offer customers a healthy roster of thousands of funds with no transaction fee.
- Commission: $7.95 per trade
- Account minimum: $0 for IRAs; $2, 500 for brokerage accounts
- Promotion: 300 commission-free trades
- Commission: $6.95 per trade
Fidelity and Merrill Edge are the only two brokers NerdWallet reviewed that received five stars in the no-transaction-fee mutual funds category. Merrill has a whopping 5, 000 on its roster and Fidelity offers nearly 3, 500. A few things to consider as you line up your freebie funds:
- No-transaction-fee doesn’t mean no fees whatsoever. Investors are still charged operating expenses (expressed as the mutual fund’s expense ratio), which are subtracted from the fund’s annual returns. Both Fidelity and Merrill have excellent fund screening tools that enable investors to pare away the pricier picks.
- Consider the initial investment requirement of the funds you want to add to your portfolio, which can easily be $1, 000 or higher. (Charles Schwab warrants a mention in this category for its Mutual Fund OneSource platform, which offers some mutual funds with a $100 minimum investment requirement.)
- Finally, it pays not to stray outside the list of no-fee funds: At Merrill Edge you’ll pay $19.95 to do so, and at Fidelity it’ll cost you a punishing $49.95 commission.
Best free trading or cash promotions with low deposit requirements
These brokers offer an abundance of free trades for new customers who deposit at least $5, 000.
- Commission: $4.95 per trade
- Promotion: New customers trade free for 60 days with $5, 000 account balance
- Promotion: $1, 000 in free trade commissions for new clients with a balance of $5, 000 or more
It’s not too difficult to unearth brokers offering initial sign-up promotions, especially if you’ve got a nice chunk of change to fund your account at the start. But for active traders, a good free trading deal with a reasonable initial deposit requirement is a bit trickier, which is what makes the promotions from OptionsHouse and TradeKing most appealing.
TradeKing’s $1, 000 in free trade commissions for new customers requires the account be funded with $5, 000 or more within 30 days of opening. Commission credits expire 60 days after they are awarded, and the offer expires . The OptionsHouse promotion, on the other hand, applies to individual, joint or IRA accounts and will appeal to more active traders. Its 100 free trades for 60 days deal translates into $495 of gratis trading. Like TradeKing, it requires an initial account balance of $5, 000, but new customers have 60 days in which to fund the account and qualify for the free trades.