The Best Brokerage Account for Beginners

One of the most intimidating parts of beginning your journey into investing is trying to figure out which brokerage you should use. Don’t worry, I’ve got you covered. Even if you’re an experienced investor I think this brokerage has some attributes that may interest you.

My recommendation is…Robinhood and I’ll lay out why below.

Nope, not that guy that runs around in tights and lives in a tree.

Although the Robinhood brokerage isn’t directly tied to the arrow-flinging hero from the story books, the motive behind them is largely the same. Robinhood makes investing more accessible to the average person by not charging fees that the big brokerages do. By doing this it helps keep the wealth with the investor and away from the Wolf of Wall Street-types, and people are taking note of it. They have already surpassed 4 Million users and passed one of the major brokerages, E*Trade, in the process. Here are just a few reasons I think you should give Robinhood a chance:

1.) No Trading Fees

The major draw for Robinhood is that they offer FREE trades. Most brokerages charge $5-10 for each trade you make, which eats into your profits, especially when you’re not investing a ton of money. No trading fees also allows you to buy small positions and diversify more easily. Say you have $250 to invest and you want to invest in 5 different stocks to diversify. With a traditional brokerage you would probably be paying $25-$50 in trading fees, so it just doesn’t make sense to start five different positions. You would probably just need to choose one stock to invest in with that $250. With Robinhood you can invest in many stocks and not pay that fee that eats into your profit.

2.) App and Web Support

No matter where you go you’ll have access to your account whether it be through their app or website. The app is beautifully designed and has a very user-friendly interface. The web version is still fairly new, but also very usable.

3.) Free Pre-market and After Hours Trading

Stocks can sway A LOT when companies report their earnings, so having access to pre-market and after hours trading is a nice feature. The normal market hours are 9:30am-4:00pm EST but they have extended their hours to 9:00am-6:00pm EST. Foreign markets can also affect stock price, so the additional hours can be useful if their is major news in those other markets.

4.) Cryptocurrency Integration

Whether or not you think cryptocurrencies like Bitcoin and Ethereum are the future it’s nice that Robinhood allows it’s users to have the option to invest in them. Figuring out how to buy cryptocurrencies can be a little tough for people that aren’t familiar with that space, but Robinhood makes it as easy as buying a stock. The best part? It’s also free. All of the dedicated crypto exchanges charge a fee to buy, but Robinhood does not. They currently support buying cryptocurrencies in 19 states and are constantly adding new states, so if they don’t support your state yet be sure to check back soon. In addition, they will also be adding additonal cryptocurrencies that will be tradeable.

5.) Tools For Analysis

One of the previous major gripes about Robinhood is that they lacked tools to analyze stocks, but they took note of this and made major strides in rectifying that. They currently offer all of the basic info you would expect to see (charts, volume, open/close price. P/E ratio, etc.), news stories about the companies, candlesticks for chart analysis, and analyst ratings.

6.) Options Trading

Feeling bold? Robinhood offers Call and Put options for their investors, so that’s perfect for all of you thrill seekers. These can be used to make a good amount of money, but make sure you understand them before you use them. They can be a little complicated and risky, so I’d recommend familiarizing yourself with basic investing before you dive into them.

7.) Great Design

As I mentioned earlier, the design and user interface is fantastic. It possesses a futuristic look that many other brokerages lack, so even if your stocks aren’t performing well they’ll still look good.

8.) Limit Buys/Sells, Stop Losses

This is a standard feature for most brokerages, but I wanted to mention it so you know that you’re not sacrificing features for free trading. In case you’re not familiar with limit buys/sells they allow you to set a price for a stock that you want to buy/sell. The trade won’t be initiated until the stock reaches the price you have set.

9.) Free Stock When Signing up with Referral

Do you like free stuff? I sure do. If you use this link to sign up you’ll get a free share of a random stock. Apple is one of the ones they (rarely) give away, so maybe you’ll get lucky. You don’t even have to fund your account before you get the free stock, so it’s definitely worth a shot even if you’re still not sure about investing. I don’t think you’ll regret it.

Author: Finance Brofessor

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