2017 is shaping up to be a really good year on many different fronts. Moreover, our hope is that it is a good year for the stock market as well. Regardless of whether stocks actually do well or not, you will want to make sure that you have the best online stock broker working for you.
In this article, we are going to discuss who are the best online stock brokers of 2017. In this way, you can invest your money in the company most likely to lend to your success during this year.
What Is a Stock Broker?
First things first. What exactly is a stock broker? A stock broker is a company that acts as an agent. It works for individuals, banks, and corporations. It executes securities (i.e. stock and bond) purchases on their behalf.
Brokers have been in existence almost since the advent of the stock market. They have always workjed on behalf of their clients to get better deals for them in the markets. This would mean that brokers have been in existence as early as the 1600s.
What Qualities to Look for in an Online Broker
When you are looking for the best online stock broker, make sure to check these three points.
- make sure that the broker is SIPC (Securities Investor Protection Corporation) insured
- the broker has to charge low fees for stock trades
- they should practice timely execution of trades close to current bid prices.
SIPC insurance is very similar to FDIC insurance. Many of us know it in place at our local banking branch. It insures an individual that they will be refunded up to $250,000 for any shares or cash that they carry in their brokerage account. It happens in the rare event when their broker of choice went bankrupt. The investor had no recourse to obtain his or her funds normally.
With the advent of the internet, fierce competition has started between brokers. They want your business on their online platforms. As a result, this means that you should be able to find a good broker that offers stock trades for well beneath $10 per trade now. Many brokers offer trading for far less than that.
Finally, you will want to check to make sure that your broker performs timely executions of your trade requests as close to the market bid price for whatever you are attempting to buy as possible. The bid price is what buyers are willing to pay for an asset right now. However, it is constantly changing due to market demand. Therefore, it is important that your broker executes trades quickly. You want to take advantage of current bid pricing.
The Best Online Stock Broker in 2017
2017 has plenty to offer when it comes to finding the best online stock broker. Listed below, you will find our favorites for this year. You will also find explanations for why we believe you will love them too.
Robinhood is changing the landscape of investing like we have never seen before. For those of you who have never heard of this broker, prepare to be shocked. Robinhood is an SIPC-insured, fully mobile-based broker. It allows investors to trade stocks for absolutely NOTHING.
Literally, an investor doesn’t have to pay any fee to have an account with Robinhood. Executing a trade charges a $0 commission fee. How does Robinhood make money, then? There are two ways. First, they use the available cash in investors’ accounts that is not being used to make trades to make loans for interest returns.
Secondly, they have recently begun offering something called “Robinhood Gold”. For a small monthly fee (i.e. $10 or less), investors are allowed to use margin (i.e. credit) to invest in stocks. In this way, they increase leverage. It also opens up a slew of other features. They can include instant deposits and pre-market and post-market trading hours.
Putting all of these great features together, Robinhood may now be worth well over one billion dollars if it were to IPO. Is this the best online stock broker? We certainly think so.
Fidelity has long been one of the best online stock brokers. It has a history of providing great customer service, reasonable fees, and solid client education materials. However, Fidelity has really taken it to the next level in the past year or so. We believe that this makes them a prime brokerage pick for 2017.
First, they reduced their commission fees on brokerage trades in February from $7.95 to $4.95. This was the first time that a major brokerage had offered commissions of less than $5 per trade. It should create a lot of new business for Fidelity.
Secondly, they also introduced a new trading and educational platform called Fidelity Active Trader Pro. It is par-to-none when it comes to providing timely information and guides. It is meant for those who would consider themselves to be active stock traders. Plus, they are currently offering a free trading promotional offer for new sign ups.
3. Charles Schwab
Much like Fidelity, Charles Schwab is one of those well-respected brokers that has been around for decades. However, Schwab identifies itself more as a brokerage for long-term “investors” than a brokerage for “stock traders” as Fidelity does.
So, why do we think that Schwab should make the 2017 best online stock brokers list? Simple. They, too, have recently cut their commission cost to $4.95 per trade. This made them another major brokerage firm that has breached the incredibly cheap $5 level. They did this in an attempt to mirror Fidelity. The latter serves as a major competitor to them. It should serve as a boon to Schwab customers.
Furthermore, Schwab does a great job of educating first-time investors. It provides them with all the charts, technical analysis, fundamental analysis, and analyst reports that will help them to be successful long-term investors. The only drawback? There is a $1,000 minimum to open a Schwab account.
Still, on the merits listed above, we are adding Schwab to the best online stock broker list for 2017.
So, whether you’re looking for a brokerage firm that is completely free, that services traders, or that seeks to serve investors, our 2017 list should have you covered. Remember, your goal when searching for a brokerage firm should always be to find:
1) Low Fees
2) Great Execution Speed for Trades
3) Quality Customer Service
Follow these three steps are you are bound to find the best online stock broker for 2017.