Recommended Online Stock Brokers for Beginning Long Term Investors 

After surveying the field, the following is our recommended online stock brokers for Canadian and U.S. residents.

But first, what is a discount online broker?

In the old days, investors had to call up their stock broker to purchase them shares in publically traded companies and the fees were pretty steep... often upwards of $30 a share.  Nowadays, practically all brokerage firms have an online presence.  Investors can now open an online brokerage account and purchase shares on their own for as low as $4.95 per trade... thank you internet!

The Basis of Our Recommendations 

We feel that the most important factor to consider as a long term investor deciding on which online broker to go with is the fees.  Transaction costs on purchasing shares eats into your returns; so to maximize returns... keep your costs low!  Brokerage fees carried a lot of weight in our recommendations for this reason.

The next thing that was high on our priority list was customer service.  If you’re having an issue of some sort while you’re trying to purchase shares, you want the issue resolved immediately!  There is nothing more frustrating than not getting good help when you need it so customer service is crucial.

In our opinion, when starting out on your investing journey, the only things that matter when choosing an online brokerage are low fees and great customer service.  There are other much better places to go for things like stock screening and company information so these two factors were at the top of our must-have list.

Our Recommended Online Stock Brokers For New Investors

Ok so the following is our recommended online stock brokers for Canadian and U.S. residents.  They are reputable companies that offer very low commission rates for purchasing shares, great customer service and they have received good reviews.

For Canadian Residents: 

Questrade: Lowest Fees in Canada!

Founded in 1999, Questrade is a Canadian discount online stock broker that began with a clear objective: “ To help Canadians reach financial independence”.  They are clearly doing their part because they offer the lowest commissions of any broker in Canada.  They have also received great reviews from many loyal customers.

Here are some of the benefits of partnering with Questrade as a long term dividend investor:

-Lowest commissions: 1 cent per share with a minimum fee of $4.95 and a maximum of $9.95.

-Purchase Canadian and U.S. ETFs for free.

-Hold U.S. Dollars in a registered account and buy U.S. stocks inside the account with no currency conversion fees.

-No annual administration fees.

-Easy to open an account and automatically transfer money from your bank.

-Easy to transfer money from another registered account.

-Easy to use stock trading platform.

-Good customer service.

-Balances are insured by the Canadian Investor Protection Fund for up to 1 million dollars.

Downside: No online security guarantee.

With the lowest fees in the country, Questrade is a solid choice for any beginning Canadian dividend investor.  We had a great experience with Questrade but decided to switch to RBC Direct Investing when our portfolio was large enough to justify the higher fees.  This was because RBC offered an online security guarantee in addition to everything else, while Questrade did not.  For this reason, we feel that Questrade is the best option for beginner investors because low fees are the most important consideration at this stage.  Online security risk can be mitigated with current software, strong passwords and by regularly changing passwords.

To open a Questrade account, simply click on the above logo and you will be directed to their website for further instruction.  Unfortunately, they do not allow U.S. residents to open an account with them.

For U.S. Residents:

TradeKing: Among the Lowest Fees in America!

TradeKing (recently merged with Zecco) began in 2005 to offer investors a new alternative that focused on honesty, fairness, great value and high-touch service.  We do not personally use their service but before recommending them as our preferred U.S. broker, we did extensive research and read many reviews.  The consensus among the many happy investors out there is that they charge very low fees and offer a high level of service.  SmartMoney seems to agree because they nominated TradeKing #1 in customer service between 2010 and 2012.

Here are some of the great benefits of partnering with TradeKing as a long term dividend investor:

-Among the lowest commissions in America: $4.95 flat rate for stock and ETF trades.

-No annual administration fee as long as you maintain a minimum household balance in your account(s) of $2500 and make a least one trade a year (otherwise its $50 annually).

-No minimum account balance.

-Good customer service  - Ranked #1 by SmartMoney between 2010 and 2012

-Easy to use stock trading platform.

-Offers a DRIP plan.

-Balances are insured by the Securities Investor Protection Corporation for up to $500,000.

Downside: No online security guarantee.

As a beginning U.S. dividend investor, low commission fees are very important to your long term returns and so TradeKing is a solid choice for you.  However, they do not offer an online security guarantee so you may wish to opt for a larger brokerage firm that does, once your portfolio is large enough to justify the higher fees.  

Unfortunately, they do not allow Canadians to open an account with them.

So these are our recommended online stock brokers for Canadian and U.S. residents.  Our recommendations are based solely on VALUE, which we have determined to be a combination of low commissions and good customer service.  These are the most important factors to consider when starting out on your journey to wealth creation.  Happy long term investing!

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