The Best Brokerages for Investing in 2024
Your brokerage account is a recommended place to keep money you want to invest in the future.
Brokerage accounts can be used to invest in various financial products, including stocks, bonds, and mutual funds.
Every brokerage account provider has benefits, drawbacks, and unique features.
Best Brokerages for Investing in 2024
- Vanguard: Low-cost index funds and ETFs
- Fidelity: $0 commission fees to trade U.S. stocks, ETFs, and options
- Charles Schwab: Access to advanced investing tools and resources
- SoFi Invest: Invest in stocks and cryptocurrencies in one place
We looked at the ten largest brokerages in the United States and settled on the best brokerages to use this year.
Vanguard: Best for Low-Cost Index Funds & ETFs
This company is focused on providing cheap index funds that look to track the market rather than beat it.
At Vanguard, you can find a mutual fund for nearly any strategy.
Some of the brokerage’s most popular funds are its all-in-one funds, including its Target Retirement Date and Life Strategy funds. These funds automatically split your money between stocks and bonds, allowing you to adjust the risk you’re willing to take on.
Many of the company’s funds are also offered as exchange-traded funds (ETFs).
You can also invest in individual securities, including stocks, bonds, CDs, and options.
Regarding costs, Vanguard has long been the king of low-expense ratio mutual funds. The company’s unique structure means that the investors in the funds are the company's owners, so the funds always charge the lowest fees they possibly can.
Other fees are also low, with a $25 annual account maintenance fee that can be waived easily by signing up for electronic statements.
Vanguard is also very fee-friendly to investors who want to trade actively. For instance, it is free to perform online trades of stocks and ETFs.
The company’s focus on getting customers to invest in its mutual funds also means it does not offer the best research options of the three.
Fidelity: Best for Low Fees
Fidelity offers a full suite of investment services, including low-fee index funds and actively managed funds that you can use to try to beat the market.
With Fidelity, you have more than 200 mutual funds to choose from. The company excels at letting you choose precisely what you want to invest your money in, allowing you to create a customized portfolio to your investment plan.
If you’d instead invest in ETFs, Fidelity offers several commission-free ETFs. If you can’t find a Fidelity ETF that meets your needs, you can invest in iShares ETFs without paying any commission.
Other options available include internationally focused funds and ETFs and the opportunity to trade securities in 25 different countries and 16 different currencies. You can also round out your portfolio with stocks, bonds, CDs, and options.
One exciting product line that Fidelity offers is its fee-free mutual funds. These funds charge no expense ratio, so you don’t pay anything to invest in them.
However, there may be hidden costs involved. Expense ratios are the cost of keeping a fund going and making sure it is appropriately tracking its index.
A no-fee fund may have to track a more straightforward index to keep costs low, which could affect returns. Still, you’d be hard-pressed to find a better deal than Fidelity’s no-fee funds.
Fidelity offers a full suite of research tools for its customers.
Charles Schwab: Best for Trading Tools and Investing Resources
Charles Schwab is a brokerage known for working well with customers of all kinds.
Beginners can invest in its low-fee, commission-free funds, while more seasoned investors can use its research tools to devise and execute their investment strategies.
Schwab manages many funds independently, including index and actively managed funds. This allows you to choose your strategy based on whether you want to follow an index or attempt to beat the market with a specific plan.
Schwab’s actively managed funds employ top investment managers with years of experience in picking investments that are likely to outperform the market.
The company’s funds offer very low expense ratios. Often, Schwab and Vanguard’s funds will be in a tight race for the title of cheapest fund for a specific market sector.
You can also invest in taxable and tax-free bond funds, allowing you to manage your risk and tax liability.
If Schwab’s funds aren’t enough, you can invest in thousands of other companies’ mutual funds with no load or transaction fees. Many of them require an investment as small as $100.
The account doesn’t charge any annual maintenance fees, and its stock trade fees are also relatively low.
This pairs well with the company’s intensive research tools that let you quickly learn everything you needabout a company or market sector.SoFi Invest: Best for Crypto AccessSoFi Invest provides an automated investing platform and self-managed brokerage accounts. The venue caters most to investors who want to trade individual stocks and ETFs without commission fees. Additionally, you are allowed to own fractional shares. Notably, SoFi Invest lets you invest in cryptocurrencies -- an increasingly popular investment sector. There is also a feature-packed mobile app that allows investors to manage their portfolios quickly.
How We Picked
We compared several factors to determine the best when looking at the country’s top brokerages.
Brokerages That We Analyzed
These are the significant factors that we compared.
The most crucial factor we looked at is the investment options each brokerage offers.
The entire point of a brokerage account is to invest your money for the future, so you want to have as many options as possible.
Every brokerage will allow you to invest in individual securities such as stocks, bonds, CDs, and options. Where they offer the most difference is in their access to mutual funds.
Mutual funds allow you to invest in a single fund that will then purchase multiple securities on your behalf. They make it easy to diversify your investment over a wide swath of the market.
Brokerages manage their mutual funds and incentivize their customers to invest in their funds over their competitors’ funds.
Knowing the types of mutual funds offered by a brokerage is essential to choosing which brokerage you should work with.
Are you looking for actively managed funds that aim to outperform the market, or do you want to track an index?
Fund expense ratios
Besides what securities they invest in, one of the most important aspects of a brokerage’s mutual funds is their expense ratios.
For example, if you invest $100 in a fund with a 1% expense ratio, and the securities it invests in grow in value to $110, your account’s balance will be $108.90 at the end of the year.
Typically, actively managed funds will have higher expense ratios than passive index funds, which aim to track specific groups of stocks.
It would be best to decide what investment strategy you aim for and what you’re willing to pay to invest in a fund. The lower the fund expense ratio, the more money stays in your pocket.
When comparing the performance of two funds, you should always compare the after-fee performance to get an accurate picture of how an investment would have performed.
Account maintenance fees
Like expense ratios, you should also look at the account maintenance fees you’ll have to pay to keep your brokerage account open.
Every dollar you pay in fees is a dollar that isn’t earning investment income, so you should work to minimize the prices you pay.
Some brokerages charge annual account maintenance fees. Often, these fees can be avoided by maintaining a certain minimum balance or jumping through a few hoops.
Other standard fees include trading fees. You must pay a commission fee every time you buy or sell a stock.
The size of this fee can vary based on what brokerage you use, what type of security is involved in the transaction, and what level of customer you are at the brokerage.
Many brokerages charge lower fees to customers with higher balances.
Research tools are an essential part of the investing process for people who want to invest in individual securities or specific market sectors.
They give you all the information you need about the economy, individual companies, and different parts of the market.
The type of research tools you can use will depend on the brokerage you’re working with. They might allow you to analyze more in-depth and quickly gather vital financial details. For example, you may want to see the 20-year stock performance of a specific company, along with changes in earnings per share, market cap, the executive board, and other important information relevant to your analysis. A brokerage more focused on getting customers to invest in passive index funds won’t offer the same research tools as a company that wants to encourage its customers to invest in individual stocks and bonds.
The three big-name brokerages--Vanguard, Fidelity, and Charles Schwab--rank among the best in the United States. Meanwhile, newer online brokerages and financial services providers are gaining traction and attracting investors who may be just beginner investors or prefer a more straightforward investing platform.
You’ll be hard-pressed to find a better deal than you would from one of these companies. Each has unique strengths, but you could open an account at any of them and succeed.
Look at the features offered by each and decide which will best suit your needs.