What Brokerage Do You Recommend for First-Time Investors or Kids?

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Learning about finance and investing from an early age can be life changing.

Many of us have children, family members or close friends who are students or just starting their careers. And often the best way to learn is by doing. So what is the best brokerage for a first-time investor or child?

That’s what a listener of the Clark Howard Podcast recently asked.

What’s the Best Investment Company for First-Time Investors?

What brokerage company provides the best combination of education and experience for first-time investors?

That’s the question a listener posed on the April 25 podcast episode.

Asked Ryan in California: “I teach economics in high school and focus a lot on personal finance. I also try to teach these same lessons to my own kids. Besides teaching them to avoid debt, I also like to teach them the basics of investing.

“Are there any brokerage firms that you would recommend for first-time investors and any advice about investing that I can give them? I wish I had started at their age.”

Clark chuckled at the question. He recalled trying to teach the basics of investing and personal finance to each of his three children. Growing up, Clark said, it seemed like his kids didn’t hear a word he said. But as they get older, it’s evident they did catch some of what he was saying.

So Clark lauded Ryan’s efforts to educate his children.

He also identified a clear-cut winner for first-time investors.

“I love what Fidelity Investments has done more than any other investment firm in offering the ability for people who are minors to have investment accounts. And people of any age to be able to open accounts with $1. And to have access to Fidelity’s Zero Funds,” Clark says.

What Are Fidelity Zero Funds?

What exactly are Fidelity Zero Funds? And why does Clark think they’re perfect for first-time investors?

Fidelity opened these funds in 2018, becoming the first brokerage to offer 0% expense ratio mutual funds in the process. Not even Vanguard, the leader in low-cost index fund investing, can claim a 0% fund.


Clark has long described the Fidelity Zero funds as a loss leader — a marketing hook to capture new customers that happens to be incredibly attractive.

“They charge no commissions but more importantly they charge no ongoing administrative expenses,” Clark says. “So they really have done the best job of anybody I’ve seen of offering an entry point for people starting to invest and especially for minor children.”

The Fidelity Zero funds are:

  • Large Cap Index Fund (FNILX)
  • Total Market Index Fund (FZROX)
  • International Index Fund (FZILX)
  • Extended Market Index Fund (FZIPX)

In the long term — we’re talking many decades — saving even tenths of a percentage point can be worth tens or even hundreds of thousands of dollars. Limiting fees is a major key to maximizing your wealth and retirement savings.

Note These Caveats About the Fidelity Zero Funds

There are a few caveats with the Fidelity Zero funds:

  • Taxes. Encourage your child or first-time investor to utilize a Roth IRA or 401(k) plan if possible. Mutual funds create tax liabilities that ETFs don’t. That doesn’t matter inside a tax-advantaged retirement account. But it’s something to consider if they’re investing in a taxable investment account.
  • Watch your expense ratios. The Fidelity Zero funds are free, as we’ve discussed. But that’s not the case for all of Fidelity’s funds. Some of them are pricey, especially compared to Vanguard and Schwab. Fidelity may be the right choice for first-time investors. But first-time investors can still make poor investment decisions inside of Fidelity.
  • Consider target date funds. The ultimate financial goal according to Clark is to save for retirement. With that in mind, his top investment recommendation inside of a retirement account is a target date fund. So the Fidelity Zero funds teach a great lesson in minimizing fees and investing in the broad market. But they may not be the ultimate when it comes to retirement investment choices.

Final Thoughts

I totally agree with Clark. I think Fidelity is the best brokerage company overall — whether that’s for first-time investors or sophisticated veterans.

Yes, there are one-off situations where other investment companies are better for specific purposes. Clark also loves Schwab and Vanguard.

But in my opinion, after using several of the top brokerage companies for years and reviewing them in depth on an annual basis, Fidelity is a better option for first-time investors looking for the best overall company.

TD Ameritrade and Fidelity historically have offered the best education for new investors, along with Investopedia in my opinion. (Investopedia isn’t a brokerage.)

Now that TD Ameritrade is finally further down the road in blending with Schwab, which bought it in 2020, I think Fidelity is the best brokerage for first-time investors to get educational content. That’s a nice bonus in addition to the no-fee Fidelity Zero funds.


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