The Cheapest Online Brokerage Platforms for US Citizens

Looking to start investing as a US citizen on a budget? You're in luck. There are several online brokerage platforms that offer competitive fees and features. Let's explore two of the most popular options for those seeking the cheapest trading experience: Rohonhood and Interactive Brokers. Additionally, we'll touch on Fidelity as a mainstream choice for those willing to pay a small fee for more comprehensive services.

Rohonhood - The Free Option

For the absolute cheapest option, Rohonhood is a top choice. It offers the best rates by charging no trading commissions, making it an incredibly cost-effective platform. Whether you want to buy or sell stocks, options, or cryptocurrencies, trading is free. However, it's important to note that advanced features like dividend reinvestment are not available with this platform.

For many users, the lack of advanced features might be a drawback, but the simplicity and ease of use make it an excellent choice for beginners and those who frequently trade in a small amount. Rohonhood is exclusively accessible via a mobile application, providing a seamless trading experience on the go.

Interactive Brokers - Combining Cost and Features

If you require a platform that offers a wide range of options and features, Interactive Brokers is a fantastic choice. With a minimum commission of $0.70, it's one of the most affordable brokers in the market. Interactive Brokers offers unbundled rates for share-based commissions, making it a standout option for those looking for a balance between cost and feature-rich trading environments.

For students, Interactive Brokers provides special lower account opening minimums, making it an attractive option for those just starting their investment journey. However, it's important to note that while Interactive Brokers is more expensive than Rohonhood, it offers more flexibility and advanced trading capabilities at a significantly reduced cost compared to other full-service brokers.

Fidelity Investments - Cost and Comprehensive Services

Fidelity Investments is a well-known name in the investment world, offering a large suite of services that cater to a wide range of investment needs. They charge a fee of $4.95 per trade, which is still relatively affordable, especially for those who have a considerable amount to invest.

Fidelity is particularly popular among retirement fund investors, but it also offers online trading services. The 5% fee for many transactions and free trading for some of their ETFs makes it a good option for long-term investors and those who are willing to pay a small fee for the convenience and comprehensive services offered.

Choosing the Right Brokerage Platform

If you're investing $1,000 and plan on having just a few transactions, Rohonhood might be the best choice for you. However, if you frequently trade or require more advanced features, Interactive Brokers or Fidelity might be more suitable. Remember, trading often can quickly add up, especially with brokers that charge fees for each transaction. It's important to weigh the costs against the benefits of each platform to make the best decision for your investment strategy.

Best Practices for New Investors

For beginners, it's essential to start small and learn the ropes. When you have $1,000 to invest, consider the following steps:

Choose a low-cost ETF: Invest in an ETF that tracks a broad index, such as Vanguard Total Stock Market Index Fund (VT) or SPDR SP 500 ETF Trust (SPY). Consider bonds: To diversify your portfolio, you might also consider an ETF that tracks bond indices, such as iShares Core US Aggregate Bond ETF (AGG) or iShares Core Inflation-Protected Securities ETF (TIP). Let your investments grow: Aim to let your investments grow for at least a decade. The longer you hold, the more time your portfolio has to recover from any short-term market fluctuations.

In conclusion, the cheapest online brokerage platforms for US citizens depend on your specific needs and trading habits. Rohonhood offers the lowest cost for those who prioritize simplicity and low fees, while Interactive Brokers and Fidelity provide more comprehensive services at a slightly higher cost. Choose the platform that best aligns with your investment goals and risk tolerance.