Investing is intimidating for those just getting started, but new brokers and robo-advisors are making it easier than ever for young adults to invest confidently with almost any amount of money.
Whether you want to start investing as little as $25 a month or have a big windfall to manage, the right company to help you reach your investing goals is just a few clicks away—here are Money Under 36’s picks for the best investment accounts for new investors.
Unless otherwise noted, you can open either a taxable investing account or an IRA with any of these accounts.
|TD Ameritrade||Best investment account for advanced trading tools and research|
|Wealthfront||Best investment account for getting started|
|Betterment||Best account for personalized advice|
|Acorns||Best investment account for teens or students|
|Ally Invest||Best discount stock broker|
|Fidelity||Best full-service broker|
|Vanguard||Best direct mutual fund company|
|Wealthsimple||Best simple investing platform|
TD Ameritrade is one of our favorite brokers for young investors right now.
First and foremost, there is NO minimum investment amount needed to open an account. As a young investor, that’s HUGE.
But what makes TD Ameritrade even better is the number of extras it offers for all levels of investors – beginner to advanced. Here are a few of the standout features, according to TD Ameritrade themselves:
- Web Platform: You can access independent third-party research, educational resources, and planning tools, stay up to date on the news, and even pull social trading insights from Twitter.
- thinkorswim: This is a professional level trading tool that gives you things like tools to perform stock analysis and test strategies, form ideas with market scans and watch for potential risks and rewards, and utilize onboarding tools like the thinkManual and platform tutorials.
- Mobile Trading: You get a selection of device-optimized mobile apps, including the Apple Watch, all of which give you the ability to handle your investments, embrace opportunities, and much more.
- Heat Maps: Pinpoint the health of the market by using a visual and intuitive platform.
- Objective Research: You’ll get access to amazing third-party research from some of the best in the game — all for free.
- Integrated Watch Lists: Track your investments wherever and however you want with detailed and customized watch lists.
- Live-streaming Media: You’ll feel like a professional trader with live-streaming from places like CNBC and the TD Ameritrade Network, for breaking news and other investment-related advice.
- myTrade Community: A social platform to share ideas with other investors and get authentic advice from some of the best out there.
- Idea Generation: You can use TD Ameritrade’s tools and research to develop new, innovative ideas and strategies for investing.
Few other brokers have this amount of robust research and tools available. You’ll also find things like a virtual trading simulator to test out your ideas.
Plus, right now you can get a sign-up bonus for opening and funding a new TD Ameritrade account. You have to open a joint or IRA TD Ameritrade account opened by June 30, 2019, and fund it within 60 calendar days of opening with at least $3,000. TD Ameritrade takes a tiered approach, and here are the details:
- To get a $100 bonus, your account must be funded with $25,000 to $99,999
- To get a $300 bonus, your account must be funded with $100,000 to $249,999
- To get a $600 bonus, your account must be funded with $250,000 or more
That may seem steep, but if you’re switching from another broker, it may not be too problematic for you. Some things to be aware of are the trading fees, which are a bit higher than some of our other favorites. But we feel the pros definitely outweigh the cons with TD Ameritrade.
Wealthfront is a great account for the beginner investor because you only need $500 to start investing, and it’s a low-fee automated investing platform.
While $500 may seem like a lot to invest at first, you’ll be happy to know that Wealthfront will manage your money for just a 0.25% fee. You’ll be hard pressed to find that low of a fee anywhere else. That combined with the other features Wealthfront offers makes it an amazing opportunity for first-time investors.
These features include:
- Free financial planning
- Starting a 529 College Savings Plan
- Wealthfront’s Portfolio Line of Credit (for those with $100,000 or more invested)
Like many of our recommended accounts, Betterment is a robo-advisor. That’s just a funny name for a company that uses an algorithm to automatically manage a diversified portfolio for you.
Betterment charges 0.25 percent a year rather than a monthly dollar amount, with no minimum balance.
For investors who want more than an automated portfolio, Betterment offers premium plans that include either annual or ongoing consultations with a team of Certified Financial Planner(R) and investment experts.
As you accumulate more wealth, you may decide you want some professional advice on both your portfolio and your savings goals.
Betterment offers a Plus plan and a Premium plan that provide additional account monitoring and calls with their financial experts.
The Plus plan requires a minimum account balance of $100,000 and increases your total annual fees to 0.40 percent. At this level, you get an annual account review and planning call with Betterment’s team.
The Premium plan requires a $250,000 minimum balance and costs 0.50 percent per year. At the Premium level, you get unlimited calls with Betterment’s team.
I like Acorns because it strips nearly all of the complexity out of investing. You download the app, link a bank account, answer a few questions, and you’re an investor.
Acorns is unique in that you can connect it to any number of debit or credit cards and Acorns will automatically “round up” each of your purchases and invest that amount on your behalf. That’s clever, if a bit gimmicky. Thankfully, Acorns handles regular automatic deposits, too.
A big downside to Acorns is that you can only open taxable accounts—no IRAs. Pricing is 0.25 percent a year for accounts over $5,000 and $1/month for accounts under $5,000. But here’s the neat bit: Acorns is free for investors under 24 or students with a valid .edu email address. If that’s you, you can get started investing any little amount—even just your spare change—without worrying about fees eating up your entire balance.
If you don’t just want to invest, but actively trade—meaning you want to build your own portfolio of stocks, bonds and/or exchange-traded funds (ETFs)—Ally Invest (formerly TradeKing) is one of the most beginner-friendly online stock brokers. Read our Ally Invest review.
While Ally is consistently praised for their customer service and online trading tools, it doesn’t offer a nationwide network of physical branch locations like some competitors. But if you’re looking for an online stock broker, that doesn’t seem like a big deal.
Ally’s stock and ETF trades cost just $4.95 online, and you can get up to $1,000 in free trade commissions when you open a new account. No minimums required.
Fidelity Investments is one of the largest investment companies int the world. Fidelity is a full-service broker, but also offers thousands of direct mutual funds and a portfolio of commission-free iShares exchange-traded funds. Read our Fidelity review.
For the DIY investor who wants to be able to trade individual stocks but also have access to thousands of mutual funds in one place, Fidelity is a great choice.
Although Fidelity used to be one of the more expensive brokers, they have recently dropped a lot of commissions and fees bringing them inline with the competition. Stock trades cost just $4.95, and Fidelity is reducing expense ratios on a number of index mutual funds to match—and sometimes undercut—Vanguard.
My favorite thing about Fidelity is their portfolio of commission-free iShares ETFs. You can trade them as much as you want without ever paying a trade commission.
If you want to be a more hands-on investor, you can build your own portfolio of mutual funds. For that, I recommend Vanguard.
Although I have money in several of the accounts listed here, most of my investments are in various Vanguard accounts for one simple reason: Vanguard pioneered low-cost investing. Now that the investing public has caught on to the simple fact that investment fees matter, Vanguard’s competitors are playing catchup.
Although you can buy and sell mutual funds through just about any stock broker, you’ll save on trade commissions by creating a direct account with a mutual fund company like Vanguard.
The downside to investing this way, however, is that you’ll need to know what you’re doing. When you open an account, you’ll need to choose one or more mutual funds in which to invest. This step paralyzes a lot of people.
In addition, most mutual funds require minimum investments of $1,000 or more. In my experience, it’s also more difficult to set up automatic investments using a Vanguard mutual fund account.
Wealthsimple is a simple automatic investing platform. They make sure that you have a balanced portfolio of ETFs, which are low-fee funds. ETFs help make sure you’re invested across the whole stock market.
Wealthsimple also offers socially responsible investing options.
With Wealthsimple, you don’t pay any trading, account transfer, or rebalancing fees. They have a simple, 0.5 percent fee for portfolios of $0-$100,000. Any portfolio larger than that has a fee of 0.4 percent.
The best investment accounts for a young or first-time investor meets the following criteria:
- Doesn’t overwhelm you
- Doesn’t cost too much or penalize you for a small opening balance
- Makes it easy to set up automatic investments to help you build wealth
Not surprisingly, I think the newer robo-advisors have a significant advantage over traditional brokerages and mutual fund companies when it comes to appealing to young investors. They’re transparent, uncomplicated, fairly priced, and mobile-ready. At the end of the day, however, it doesn’t matter as much where you invest but that you invest somewhere.