Best ETF Brokers for May 2024

You may have seen headlines about the Dow Jones Industrial Average and S&P 500 reaching all-time highs recently, as well as some that are talking about the new bull market in 2024. The stock market can not only be an exciting place to put your money to work, but it can also be an excellent long-term wealth builder.

However, buying individual stocks isn't right for everyone. Fortunately, all major brokers offer commission-free ETF investing these days, so how do you choose the best fit for you? Read on for our top ETF brokers for 2024.

How do I choose an ETF broker?

There's no perfect answer here. The best ETF broker for you is one whose features best meet your needs.

Robinhood

Best ETF broker for investors who: Want an easy-to-use platform to start buying and selling ETFs.

Robinhood pioneered the zero-commission stock trading business, and is still the low-fee leader. It provides an extremely user-friendly way to get started with ETF investing, and has unique features that might appeal to certain investors, such as an IRA match.

Why ETF investors might love Robinhood

• Fractional shares: Robinhood allows investors to buy fractional shares of ETFs and stocks, which can be a big advantage, especially for newer investors.
• IRA match: Robinhood matches 1% of IRA contributions for all members, and 3% for its paid Robinhood Gold subscribers. If you're planning to invest in ETFs in a retirement account, these bonuses can really add up over time.
• Easy to use: Robinhood's app-based investment platform is highly rated and makes it easy to buy and sell ETFs, even for those brand new to investing.

Why ETF investors might not choose Robinhood

• Short on resources: Robinhood was designed to be a low-frills, but user-friendly way to start investing. It doesn't have nearly as many research tools and educational features as many other brokers.

Read our full review of Robinhood.

Fidelity

Best ETF broker for investors who: Want a full-service brokerage experience with a solid trading platform.

Fidelity is one of the largest and oldest brokers in the U.S., and offers a ton of features such as educational tools, research reports, and more. It also offers a surprisingly user-friendly investing interface for an older and "traditional" brokerage firm, and can be a great all-around broker to start investing in ETFs.

Why ETF investors might love Fidelity

• Great investment app: Fidelity has a highly rated investment app, especially for an "older" broker.
• Fractional shares: Fidelity allows investors to buy less than a full share of the ETFs they want to invest in, making it easier to get started without a ton of cash, and allowing all investors to allocate their capital more efficiently.

Why ETF investors might not choose Fidelity

• Management fees: If you're planning to be a hands-off IRA investor, you might want to look elsewhere, as Fidelity's robo-advisory platform charges a 0.35% management fee to customers with account balances over $25,000.

Read our full review of Fidelity.

Merrill Edge® Self-Directed

Best ETF broker for investors who: Want to start buying ETFs in a user-friendly account, especially those who have Bank of America accounts.

Merrill Edge® Self-Directed is an investment platform owned and operated by Bank of America. It offers excellent educational tools, and can be especially great for existing Bank of America customers who want to invest in ETFs. After all, Merrill Edge® Self-Directed account balances count toward the bank's excellent Preferred Rewards program.

Why ETF investors might love Merrill Edge® Self-Directed

• Bank of America rewards: Merrill Edge® Self-Directed balances can help you earn a higher status level in the Bank of America Preferred Rewards program. This can get you better interest rates on loans, higher credit card rewards, and more.
• Customer service: Merrill Edge® Self-Directed has customer support available by phone 24/7 and offers online chat help. One big differentiator is that Bank of America has thousands of banking branches in the United States, many of which offer in-person support for Merrill Edge® Self-Directed customers.

Why ETF investors might not choose Merrill Edge® Self-Directed

• Not feature-packed: If you're looking for advanced tools, some of the more traditional brokerage firms on this list offer far more of these features. Merrill Edge® Self-Directed offers more features than some of the no-frills app-based trading platforms, but not as many as some of the largest brokers.

Read our full review of Merrill Edge® Self-Directed.

Ally Invest

Best ETF broker for investors who: Want a simple online- and app-based platform to buy and sell ETFs and other investments.

Ally Invest is an excellent all-around investment platform that could be a solid choice for ETF investors. It has an easy-to-use trading interface, both in desktop and app-based forms, and offers both self-directed investing as well as automated investing (robo-advisor) that uses ETF-based portfolios.

Why ETF investors might love Ally Invest

• Robo advisor: Ally Invest Robo Portfolios is an excellent automated investment platform that uses ETFs to create and maintain appropriate investment portfolios.
• All-in-one platform: As one of our top-rated online banks, Ally Invest can be a great place to open a brokerage account if you want your checking and savings account, as well as your investments, all in one place.

Why ETF investors might not choose Ally Invest

• Trading tools: Ally Invest has an easy-to-use platform, but doesn't have many advanced trading tools like some of its larger rivals do.

Read our full review of Ally Invest.

Charles Schwab

Best ETF broker for investors who: Want a full-featured online broker with great customer service.

Charles Schwab pioneered the concept of a discount brokerage nearly 50 years ago, and today is one of the largest financial firms in the world. While its platform isn't as easy to use as some of its tech-focused rivals, it has tons of features that ETF investors may find appealing, such as research reports, educational tools, and several different trading platforms to choose from.

Why ETF investors might love Charles Schwab

• Customer service: Charles Schwab offers 24/7 customer service by phone and live chat, and it also operates more than 340 branch locations across the United States for in-person support.
• Account types: With Charles Schwab, you can invest in ETFs through most brokerage account types, including standard (taxable) accounts, IRAs, custodial accounts, college savings accounts, specialized retirement accounts, and many others.
• Lots of features: Charles Schwab has tons of trading tools, educational resources, and provides free stock research access. It has several investment platforms that can meet the needs of investors of all skill and experience levels.

Why ETF investors might not choose Charles Schwab

• Robo-advisor minimum: Charles Schwab offers a robo-advisory service that uses ETFs to create portfolios, but it might not be the best choice for newer investors who want to automate their ETF investing, as it has a $5,000 minimum.

Read our full review of Charles Schwab.

Vanguard

Best ETF broker for investors who: Want to invest in index funds, including both ETFs and mutual funds.

Vanguard's brokerage platform lags behind some of its rivals in several key areas. If you want to buy fractional shares of ETFs, for example, it's probably not a good fit for you. However, it can be a fantastic choice if your goal is to invest in passive index funds or fixed-income investments.

Why ETF investors might love Vanguard

• Investment research: Vanguard publishes lots of investment research and educational content. This can be a big perk for ETF investors trying to choose investments.
• Mutual funds: In addition to being a solid place to buy ETFs, Vanguard offers thousands of no-transaction-fee mutual funds, especially its own fantastic low-cost index funds. To be perfectly honest, Vanguard's mutual fund access is perhaps the biggest reason to choose it as your broker.

Why ETF investors might not choose Vanguard

• No fractional shares: Fractional shares allow ETF investors to build a portfolio without a ton of capital, and allows investors to allocate capital more efficiently. Vanguard doesn't currently support fractional share investing.

Read our full review of Vanguard.

In most cases, the process of opening a brokerage account, for ETF investing or otherwise, is rather quick and straightforward. Here are the general steps:

1. Determine what type of brokerage account you need (individual, IRA, etc.) and what you want to invest in -- stocks, mutual funds, ETFs, etc.
2. Compare different brokers to find the best fit for you.
3. Fill out the new account application, which will require you to provide identifying information such as your Social Security number.
4. Add funds to your new account. You can do this by linking your bank account and transfering funds, or you can mail a check or money order.
5. Start investing.

At the time of writing, there are more than 2,000 ETFs listed on major U.S. exchanges. So it would be far too time-consuming for you to research and compare all of them. With that in mind, here are some suggestions to help you understand how to invest in ETFs and narrow down your search.

Active or passive ETFs?

ETFs fall into two main categories -- active and passive. An active ETF (also called "actively managed") is one that employs a fund manager or managers to construct a portfolio. A passive ETF is one that aims to track a benchmark index. For that reason, it's also referred to as an index fund.

The goal of index ETF investing is to match the performance of a certain benchmark. The goal of active ETF investing is to beat the performance of a benchmark. Active ETFs tend to have higher fees and don't always beat the market, but that's the goal.

What are your investment goals?

Is growth your main priority? Maybe look at a Nasdaq index fund or another that invests in fast-growing companies. Are you more concerned with income? Maybe a high-paying ETF like the Vanguard High Dividend Yield ETF could be a good fit. Looking to preserve capital at all costs? A bond ETF like the iShares Core Total U.S. Bond Market ETF could work well. The right answer for you might be a combination.

What are the costs?

You probably wouldn't buy a new TV without shopping around for the best deal, and the same logic applies to ETF investing. Why would you buy an S&P 500 index fund with a 0.40% expense ratio when there are some with 0.03% expense ratios that do the exact same thing?

If your broker allows it (several on this page do), you can buy fractional shares of ETFs. In other words, you can buy ETFs without needing to place your orders in whole numbers. If you want to buy 1.5 shares of an S&P 500 ETF, you can do so by using fractional shares.

There are a couple of good reasons why fractional share investing is a valuable feature in an ETF broker. First, it allows you to put all of your money to work. Let's say the ETF you want to buy costs $400 per share, and you have $700 in your account. Without fractional shares, the most you could afford is a single share.

Second, fractional shares allow beginners to build a portfolio without a ton of money to start. You can start buying ETFs with just a few dollars if your broker permits fractional share investing.

Few brokers have a minimum opening deposit these days, but not all allow fractional share investing. If yours does not allow fractional shares, you'll need at least enough money to cover the cost of one share of the ETF(s) you want to invest in. If you can trade fractional shares, you can get started with any amount of money (some brokers require increments of $1 or $5 for fractional shares).

Just like when you're investing in individual stocks, there is a wide spectrum of risk within the ETF world. There are ETFs that invest in short-term Treasury bonds that are about as safe as you can get. ETFs that track broad stock indices like the S&P 500 are likely to be volatile over time, but are certainly less risky than owning any one individual stock. And then there are ETFs with narrow focuses and high growth ambitions that can be rather risky investments.

Exchange-traded funds, or ETFs, combine some of the advantages of mutual fund investing with the convenience and simplicity of buying stocks. If you're looking for the best ETF brokers, commission-free trading is a must. You may also want fractional shares, in-person support, and strong research products.

Like mutual funds, ETFs pool investors' money to buy a diverse portfolio of stocks, bonds, or other investment assets. This can be a great hands-off investment approach and can also give you more diversification than simply loading your portfolio with individual stocks.

Unlike mutual funds, however, ETFs trade on major stock exchanges, and can be bought and sold easily with the push of a button. You can buy ETFs whenever the stock market is open, and the transaction will be instantaneous.

What's more, while mutual funds typically have a minimum initial investment (often $1,000 or more), the price of ETF admission is the cost of one share of the fund. If your broker allows for fractional share investing, you can invest in an ETF with as little as $1.

At The Motley Fool Ascent, brokerages are rated on a scale of one to five stars. We primarily focus on fees, available assets, and user experience; however, we also take into account features like research, education, tax-loss harvesting, and customer service. Our highest-rated brokerages generally include low fees, a diverse range of assets and account types, and useful platform features.

See our full methodology here: Ratings Methodology

Brokerages we evaluated for consideration on this page: Acorns, Ally Invest, Axos Self-Directed Trading, Betterment, Cash App Investing, Charles Schwab, Delphia, Domain Money, Ellevest, Empower, eToro Brokerage, E*TRADE Core Portfolios, E*TRADE, Fidelity, Fidelity Cash Management, Fidelity Go®, Firstrade, FOREX.com, Interactive Brokers, J.P. Morgan Self-Directed Investing, M1 Finance, Magnifi, Marcus Invest, Merrill Edge® Self-Directed, Moomoo, NinjaTrader, Personal Capital, Plynk, Prosperi Academy, Public, Robinhood, Rocket Dollar, Schwab Intelligent Portfolios, SoFi Active Investing, SoFi Automated Investing, Stash, Stockpile, Tastytrade, Titan, Tornado App, TradeStation, Tradier, Vanguard, Vanguard Digital Advisor®, Wealthfront, Webull, Zacks Trade.