Technology is making it easier than ever to invest - which is awesome. However, some places still are charging outrageous fees and commissions to buy stocks and ETFs online. Even some of the firms that advertise "get started with just $5" can end up charging you huge fees as a percentage of what you invest. So, where can you truly buy stocks online for free?
We've talked about our favorite places to invest for free before, but most of those companies only allow you to invest in mutual funds and ETFs for free. While they have no minimum investment amount (which is awesome), they don't allow you to invest in individual stocks.
For 95% of people, that's fine. We don't recommend most people invest in individual stocks anyway. They should be building a low cost ETF portfolio for the long run. But for those that do what to buy individual stocks, there are still places that allow you to buy stocks online for free. Check it out:
Where To Buy Stocks Online For Free
Right now, there are only two ways to buy stocks online for free (i.e. commission-free). Honestly, there is one platform that always allows it, and there's another that has a really, really long promotion that essentially allows it.
Robinhood is an app for your phone (both Android and iPhone) that allows you to trade stocks for free. We like Robinhood because it really does allow for free trades - and that's awesome. However, the extent of why we like Robinhood really ends there.
The platform is pretty "no-frills" in what you get. There are limited tools and resources, there is no desktop version, the amount of investments available on the platform are incredibly limited, and even doing basic things like getting you tax form at the end of the year is a challenge. You can read our full Robinhood review here.
However, free is free. According to a TD Ameritrade study, the average "active trader" now trades almost 18 times per year. If you trade 18 times per year at a place that charges a $4.95 commission each time, you're spending $89.10 more per year than someone who invests on Robinhood.
If you're investing a low amount of money, that can add up to a really big savings as a part of your portfolio expenses.
Fidelity is our favorite pick for an online broker for a lot of reasons. Beyond the fact that it's a full service brokerage, allows you to open and use every type of account, every type of investment, and has excellent customer service, they are currently running a promotion that will allow you to invest for free for up to two years.
Fidelity already tops our lists because they offer no minimum IRAs and a large amount of commission free ETFs. They also make it easy to do just about everything, both on mobile and online. They have a lot of locations around the United States as well, should you need professional help. Check out our full Fidelity review here.
What brings them to this list is that they are currently running a promotion that allows you 300 commission free trades, and up to 2 years to use them. So, if you don't take advantage of their many free products, you can still invest for free and buy stocks online for free at Fidelity. That's a great deal. Even after your free trades are up, they have one of the lowest commission rates at just $4.95 per trade.
So, if you're looking for a brokerage to invest with for the long run, we strongly recommend Fidelity.
It's important to remember that fees and expenses is one of the leading reason why investors don't outperform the market over time (after, of course, investment selection).
If you're going to be investing in individual stocks, or mutual funds and ETFs that aren't commission-free, you need to find a broker that allows you to trade for free. Both Fidelity and Robinhood are potential options. Robinhood is no-frills, but free. Fidelity is full-service, but only allows you to buy stocks online for free for a limited time.
Let us know your favorite in the comments below!