The Best Trading Platform For Beginners

Written By Jeff Hindenach
Last updated July 17, 2020

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Image showing a woman viewing financial graphs and charts
Investing
July 1, 2020

Simple. Thrifty. Living.

If you want to get into investing but aren’t sure how to start, signing up for the top online investment sites can be a good first option. Instead of paying an arm and a leg for your own broker, you can use websites to learn more about the different types of investing, and then talk to one of their brokers for much cheaper than going through traditional brokerage firms. You can also have easier access to your own investments since the top sites offer online user interfaces that help you track and make changes to your investments. Learn more about which trading platform is best for beginners below.

In stock investing, the investor makes a profit from the dividends paid by the share’s company and rising stock value. One can make more profit during a bull market, when the value of stock markets is high, and less profit during the season of the bear market, when the value of stock markets decline.

Beginner investors oftentimes liaise with registered stockbrokers to buy shares through them. They only need to place an order with the broker indicating the number of shares to purchase and the specific stock preferred. The broker moves further to market and buy shares for the beginner’s account. The transaction is made fast if the beginner pays for the share electronically through credit card or online accounts.

In the modern world, numerous people are turning to online investment. Online investment enables many to bypass the charges and the fees levied by investment banks and traditional brokerages, manage their portfolios, act upon, and find new opportunities for investment. For newbie investors, it has become easier and popular to invest in stock online. For newbies, the greatest challenge lies with developing a good plan to ensure the investment stabilizes and yields maximum profit. So what is the best investment company for beginners?

For first-time investors, that strategy includes choosing the best online trading platform for beginners that makes trading easy and gives them the help and support they need.

The best investing sites for beginners:

  • Provide educational tools
  • Offer features that simplify the trading process
  • Give real-time support through chat, phone and email communications

There are many online investment sites out there, but the best ones that cater to investing beginners are the top names in the field. Picking a site will depend on what kind of investments you are interested in. Here are the best online investment sites for beginners to choose from:

M1 Finance Investing

www.m1finance.com

Best for: Overall investing. With minimal fees and options such as fractional trading, M1 Finance is an investing option for the future, leaving tradition investing options like E*Trade in the dust.

Price: Like many new tech-focused investing companies, M1 Finance offers commission-free trading. It also does not charge an advisory fee for robo-advisor portfolios, which puts it above other popular robo-advisors like Betterment. It does charge a fee if your account is under $20 or if you have had no trading activity within 90 days.

Features: M1 Finance utilizes “pie” investing, which presents you with a recommended pie that divides up your investment options, and you can adjust the pie however you wish. It allows you to have complete control over your investments and invest in companies that you believe in.

Fractional shares: M1 Finance offers fractional shares, which allows you to invest in partial shares, making it easier to invest for less.

Customer service: In order to get ahold of M1, you will need to go through a dedicated phone number or email service.

Betterment

www.betterment.com

Best For: Automated Investing. Betterment is the best online brokerage for beginners who are lazy since it automates trading for you. All you do is fund your account and answer questions about the types of investments you want, and Betterment will do all the heavy lifting for you. You can sign up for Betterment here.

Price: The benefit of Betterment is there are no complicated fees, just a percentage charged depending on how much you’ve invested. It’s 0.25 percent annually, no minimum required. For the premium service you must invest at least $100,000, the fee for this is 0.40 percent annually.

Features: Since Betterment is an automated service, it doesn’t offer a lot of options when it comes to investing. Its main platform invests in both stock and bond ETFs to create your portfolio. You can also set up various forms of IRAs through Betterment, which will then tailor your investments based on your goals.

Other highlights: You can currently get a year of free management, all dependent on the amount you invest. If you invest between $15,000-$999,999 you’ll receive one month for free, If you invest, $100,000-$249,000 you’ll receive 6 months of free management, and if you invest anything over $250,000 you will get an entire year of free management.

Customer Service: Since Betterment does all the heavy lifting for you, of course there are going to be questions, which Betterment is more than capable of answering. You can also get financial planning advice via Betterment.

Acorns

www.acorns.com

Best For: Automatic investing, people new to investing and those looking to increase their savings but not necessarily make a great deal of money. You can sign up for Acorns here.

Price: Depending on the services, Acorns costs $1, $2 or $3 monthly.

Features: You link credit cards and bank accounts to the Acorns app, and it automatically invests small sums of money on occasion. You can choose from among five portfolios, each with a different risk-reward ratio.

Other Highlights: The platform will rebalance your portfolio as needed and reinvest your dividends. Plus, Acorns lets you turn off the automatic investing function and make manual investments if you prefer.

Customer Service: Acorns doesn’t employ financial advisers, but its staff will answer your questions via phone, email or live chat.

Coinbase

www.coinbase.com

Best for: Overall cryptocurrency needs.

Price: Coinbase charges hefty fees compared to some of its competitors, which you can do when you are the #1 name in cryptocurrency options. A bank transfer will run you 1.49% of your payment. If you want to use a debit or credit card, it will cost you 3.99% of your payment.

Options: Coinbase offers three services to use: a brokerage, cryptocurrency exchange and a wallet. The brokerage allows you to purchase your Bitcoins. The exchange allows you to trade Bitcoins and other cryptocurrencies. The wallet holds your currency in a secure environment to keep it safe. Most exchanges and brokerage sites are not as secure as a cryptocurrency wallet.

Pros: Coinbase is the biggest Bitcoin brokerage currently available. Its interface is very easy to use and especially designed for beginners to cryptocurrency. It also offers higher buy limits than its competitors.

Cons: Since Coinbase is so popular, it can charge more for its services, which it does. It also only allows two methods of payment, while competitors offer more options.

If you are looking for an alternative to traditional investing, crowdfunded investing services can be a good way to go.

RealtyShares

www.realtyshares.com

RealtyShares allows you to invest in a portion of a real estate investment project without having to deal directly with that project. The minimum investment is $5,000, which allows people with smaller incomes who are interested in real estate investments to participate at a lower price. The only downside is that your investment is not liquid, so you have to wait until the project is completed and sold before you get the return on your investment. To find out more, here is our RealtyShares review to give you a better idea of how it works.

Looking to invest in the stock market but have no idea where to begin? You’re not alone; investing in the stock market can be confusing and overwhelming, especially for first timers. People usually think investing in the market is like gambling: the house, like the market, will always win and you’ll eventually lose money. Or they know they should invest for the long term but don’t know how to start. So how does one navigate the stock market?

1. Set Goals

Are you looking for long term investments to help save for retirement or are your goals more in line with buying a house? If you have multiple financial goals, prioritize according to their level of importance If your list of goals is lengthy, focus on the top three. These goals should reflect what is important to you and your financial future.

Don’t expect to suddenly get a winning portfolio overnight. First, determine the reasons you want to invest in the stock market. Do you want to have funds for future retirement, or do you want to be able to cash out in 6 months to a year? Do you want to save for a home or college? Or do you want to be able to leave your children an inheritance?

Determine your goals, and you’ll know better what types of investments you should make. You could trade stocks, or open a retirement account like a 401(k) or a Roth IRA. You could open a brokerage account and let a robo-advisor tweak your portfolio. It’s very easy to get started with an online investment site, and many of them have guides to walk you through your first trade. Check out our list of the best online investment sites here.

Knowing how much you’d like to have will also help you determine what you need to invest. However, keep in mind that nothing is ever certain when it comes to investments, so be prepared to possibly fall short of your goals. Which brings us to risk …

2. Understand the Risk

What is your risk tolerance? Spend time thinking about and evaluating your true feelings regarding how high your risk tolerance is. You don’t want to invest in something that far exceeds your comfort zone. If you’re nervous about even losing a dollar or two, the stock market probably isn’t for you. Tucking your money away in a lower risk option is most likely your best bet. However, if you’re comfortable with a possible 10% loss, then the market may be for you.

Some investments are riskier than others. Know your risk tolerance, and you’ll be better equipped to stay away from riskier investments that fall outside the range of what you are willing to lose. Research investments to see how risky they may be. If you have set a long-term goal for a retirement fund, you can choose a less risky investment that pays over the long-term. But if you want a good amount of cash back within a year, you may be more comfortable with a riskier investment that might pay out.

3. Length of Investment

Set a time frame for each of your top goals. These particular goals and time frames will create a foundation for how you will navigate the market.

  • Less than 2 years: If you’re looking to access your money within two years, the market is a bad idea. With investments less than two years, you’re not likely to turn a profit, but rather lose money. Shorter investments don’t have the time to rebound like other longer investments do. You’re better off putting that money in a high yield savings account.
  • 2-10 years: If your investment period is between 2-10 years you have a much higher chance of returning a profit, however that doesn’t mean there is a guarantee. Within this time frame it is smart to diversify your investments at whatever risk level you’re comfortable with.
  • 10+ years: At this level, the stock market is a good place to put your money. In terms of the history of the stock market, almost every investment over 10 years has seen a return. When you look at it this way, that’s pretty good odds. If you’re in this category, investing heavily in the stock market is your best bet.

4. Don’t Let Your Emotions Cloud Your Judgment

The stock market isn’t the place to let your emotions rule. Don’t let someone you know get you all excited about a particular stock that you rush blindly into investing. Do your own research. Additionally, don’t let your insecurities about a particular stock you have invested in cause you to make a hasty decision. Again, research and understanding of the market is key.

It may be wise to sit down with an investment advisor that you feel comfortable with, and go over all the basics first. There’s a lot to learn about the stock market, and it would be better to have a broad understanding of the different types of stock market order types and investment accounts before you take any action.

Bonds Investment

Large entities such as the federal government or corporations borrow money from individual investors through selling bonds. New investors can purchase bonds through a brokerage firm. A newbie should choose the bond type from different entities that are solid financially. Bonds are considered as safer investments for beginners since their prices are less volatile, though they involve a slight risk.

Sometimes the entity issuing the bond may be unable to pay back the loan if it goes bankrupt. Beginners are advised to purchase the federal bonds through the agency itself, the treasury direct. This helps the new investor purchase bonds without the aid of brokers. Investors in bonds benefit in receiving the interest payments and principal debt when the bond matures.

Mutual Funds Investment

Many new investors may lack knowledge on individual stocks but wish to enjoy the benefits in the stock market. Mutual funds would be appropriate for such a newbie; it represents a large number of investments that are spread out to reduce the investor’s exposure to the risk. For newbies, mutual funds are not likely to make them broke; it is unlikely to result in an early retirement. This is because mutual funds invest in bonds, stocks, derivatives, commodities, real estate, cash accounts or may involve an interest in a combination of investments, such as one part of bonds, one part of stock and one part of cash.

New investors begin with opening an online brokerage account from a brokerage company that does not charge commission fees for regular automatic payments and allows automatic investment. To make the investment easier and faster, the newbies should fund the account by online transfer. New investors are advised to know their timeline and goals before they invest in mutual funds. This would enable them to choose the best mutual fund to invest in that fits their investment goals and needs. If new investors have not decided on a mutual fund, they are recommended to temporarily park their money in a money market mutual fund. It helps them to earn a little money as they protect their principal while they decide.

Generally speaking, if you are looking to invest a small amount of money look to companies who don’t require high minimums. Many investment firms require at least a $3,000 minimum just to get started. Certain firms such as E*TRADE Securities cater to the first time investor, providing easy trading tools and low minimums. The best brokerage account for beginners makes it easy to jump into the stock market world.

About the Author

Jeff Hindenach

Jeff Hindenach is the co-founder of Simple. Thrifty. Living. He graduated from Bowling Green State University with a Bachelor's Degree in Journalism. He has a long history of financial journalism, with a background writing for newspapers such as the San Jose Mercury News and San Francisco Examiner, as well as writing on personal finance for The Huffington Post, New York Times, Business Insider, CNBC, Newsday and The Street. He believes in giving readers the tools they need to get out of debt.

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