It took me a while to start investing because it seemed so complex. Not only did you have to decide what stock to buy, but you also had to figure out how to buy it! Since you can't deal directly with companies, that means a "broker" — a middleman from whom you can buy any companies' stock or mutual funds that combine a lot of stocks into one basket.
Nowadays, there are a lot of brokers out there, ranging from old-school companies like Charles Schwab where you have a relationship with a local office and a person, to slightly newer behemoths like Vanguard and Fidelity, to upstarts like Betterment that aim to totally automate the process. Plus, there are all the free investing apps out there.
But how do you choose which broker to go with? Since many of these companies are well known and trustworthy (that is, they won't run off with your hard-earned money the way Bernie Madoff did), you need some way to distinguish them.
In my opinion, if you're trying to distinguish between trustworthy companies, there are three things to take into consideration:
- What kinds of fees do they charge? Can you invest for free?
- What kinds of services do they provide?
- What kinds of incentives do they offer to get you to choose their company rather than their competitor?
The Internet age is really making the third factor shine! Practically every month new offers come out as brokers try to entice people to move their investments, or to begin investing for the first time. This is a great time to be thinking about opening a new investment account. Because it's so easy to research fees and offers, many of the big brokerages are matching each other's prices and offers, making the environment better and better for customers.
Note: Due to the pricing wars with the major brokers over the last few months, many have changed or eliminated their bonuses. We've worked hard to keep up, but if you notice something different, let us know!
I took a look around and here are some of the best stock brokers and investing offers out there right now:
Ally - Up to $3,500
I used to be mostly familiar with Ally as the high-interest online savings account of choice for online bloggers — they almost always offered the highest rates and for years many people have used them for their emergency funds.
Ally offers what I think is the best deal out there right now.
They are currently offering you up to $3,500 if open a "self-directed" account with them. Their full promotion looks like this:
Deposit Amount | Bonus Amount |
|---|---|
$10,000 to $24,999 | $50 |
$25,000 to $99,999 | $200 |
$100,000 to $249,999 | $300 |
$250,000 to $499,999 | $600 |
$500,000 to $999,999 | $1,200 |
$1,000,000 to $1,999,999 | $2,500 |
$2,000,000+ | $3,500 |
Ally also a transfer reimbursement promotion of up to $150. Basically, if you are switching brokers, and your old broker charges you a fee to leave, Ally will reimburse that fee up to $150. You simply have to complete an account transfer of $2,500 or more to qualify.
Read our full Ally Invest review here.
Get up to a $3,500 bonus!
M1 Finance - Up to $2,500
M1 Finance is one of my favorite investing platforms because they allow low minimums, commission-free trading, and fractional shares. Plus, they make it so easy to create a portfolio based on your specific asset allocation and maintain it into the future.
M1 is also offering a compelling bonus offer if you transfer new funds in.
They are currently offering you up to $2,500 if transfer over a certain amount within 60 days. Their full promotion looks like this:
Deposit Amount | Bonus Amount |
|---|---|
$20,000 to $100,000 | $100 |
$100,001 to $250,000 | $250 |
$250,001 to $500,000 | $500 |
$500,001 to $1,000,000 | $1,000 |
$1,000,001+ | $2,500 |
Read our full M1 Finance review here.
Get up to a $2,500 bonus!
E*TRADE - Up To $2,500
E*TRADE has gotten in on the incentive war too! Their bonus structure starts a little higher than Ally Invest, but it matches it at every tier.
If you open a new account with E*TRADE you will need to deposit at least $25,000 to receive incentives, but they are competitive:
Deposit Amount | Bonus Amount |
|---|---|
$25,000 to $99,999 | $200 |
$100,000 to $249,999 | $300 |
$250,000 to $499,999 | $600 |
$500,000 to $999,999 | $1,200 |
$1,000,000+ | $2,500 |
We think E*TRADE is great, especially when it comes to investing in a Solo 401k. Read our full E*TRADE review here and decide for yourself.
Get up to a $2,500 bonus!
Merrill Edge - Up to $600 & Free Trades
Merrill Edge is Bank of America's brokerage firm (the result of Bank of America's acquisition of famed trading firm Merrill Lynch during the financial crisis of 2008). It's a fine overall choice for anyone, but if you already have a banking relationship with Bank of America, it might be especially tempting due to the "Preferred Rewards" status you can get.
Merrill is one of the last remaining brokerages that hasn't adopted commission-free trading for all. However, if you qualify for Bank of America Preferred Rewards, you can get $0 commissions.
Their current bonus offer includes up to $600 in cash. Here are the levels of upfront investment you need to qualify:
Deposit Amount | Bonus Amount |
|---|---|
$20,000 to $49,999 | $100 |
$50,000 to $99,999 | $150 |
$100,000 to $199,999 | $250 |
$200,000+ | $600 |
As you can see, they have one of the lowest minimums to get started - and their top tier bonus of $600 is less of a requirement than most on this list. However, the product and costs don't really align with the rest of the industry anymore.
Read our full Merrill Edge review here.
Get up to a $600 bonus!
Robinhood - Free Share Of Stock
Robinhood is the popular commission-free investing app that a lot of young traders have been making headlines in the news by using. We also rate it as one of our favorite free investing apps.
One of the cool things about Robinhood is that, when you open an account, you can get a free share of stock. This stock could have a value of anywhere from a couple dollars to hundreds of dollars! You never know what you'll get.
Read our full Robinhood review here.
Get a free share of stock!
Webull - Free Share Of Stock
Webull is a direct competitor to Robinhood that also offers commission-free trading on an app. Were they differ slightly is that Webull offers a lot of more advanced features and analysis that you don't see on the Robinhood app.
Webull gears itself to more advanced traders. But they also offer a similar promotion - get a free share of stock when you open an account!
Read our full Webull review here.
Get a free share of stock!
Vanguard Digital Advisor® - Waive 90 Days Of Advisory Fees
Vanguard recently launched their robo-advisor tool called Vanguard Digital Advisor.
The minimum investment to enroll in Digital Advisor is $3,000. The annual net advisory fee is approximately 0.15% AUM (or roughly $1.50 for every $1,000 you invest), although it will vary depending on your specific holdings.
Right now, you can enjoy your first 90 days of Vanguard Digital Advisor investment management with no advisory fees if you enroll by April 30, 2021.
Read our full Vanguard review here.
Betterment - Up To 1 Year Free
Betterment has become a darling of the personal finance community on the Internet for its "robo-advising" service. Unlike other brokers on this list, Betterment doesn't charge a flat fee for individual trades. You can trade as much as you want for free.
Instead, Betterment makes money by charging an annual fee on your overall investment portfolio. For most of its customers, that's 0.25% annually ($25 for each $10,000 you have invested). Its promotion doesn't include cash back, but instead offers to waive the 0.25% fee for a certain amount of time depending on how much you deposit:
- Deposit $15,000, get one month free
- Deposit $100,000, get six months free
- Deposit $250,000, get one year free
As a "robo-advisor," Betterment recommends a portfolio based on questions you answer about your goals, age, and so on. After that, it does automatic rebalancing to keep your portfolio in line with your stated goals, moving money back and forth between investments without your having to do anything active (unless you want to). It also automates tax-loss harvesting, which might be of interest if you're investing outside a tax-advantaged retirement account.
Read our full Betterment review here.
Get up to 1 year managed for free!
Final Thoughts
There are a lot of brokers out there that didn't quite make the cut for this list. Either they aren't offering cash promotions right now, or they're offering much smaller promotions that didn't seem as worth it.
However, my research shows that right now, with the stock market fairly hot and several newer entrants into the stockbroker business (including Betterment, which is on this list, and others, like, say, Motif, which is not) stockbrokers are pretty keen to offer incentives.
My guess is that cash back, free trades, and other incentives to switch services are going to keep improving for a while. Just in the last month, Ally, TD Ameritrade, and others are starting to offer really significant cash back if you move a lot of money to their platform. I think others are going to be compelled to at least consider keeping up.
All in all, it's a pretty good time to be shopping for a new stock broker!
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him on the About Page, or on his personal site RobertFarrington.com.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.
