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What a broker is
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A broker is the app or platform where you buy and hold your investments. Choosing a good one matters more than choosing the perfect ETF.
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How to choose a broker
Check these, in this order:
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Never use an unregulated platform, no matter how good the app looks.
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- Regulation. It must be licensed by a financial regulator in your country or region (for example in the EU, the UK or the US).
- Investor protection. Find out which compensation scheme covers you if the broker fails. In the EU, the investor compensation directive requires a minimum of 20,000 EUR per investor (European Commission). In the US, SIPC protects the cash and securities in your account at a member broker up to $500,000, including up to $250,000 in cash, if the broker fails (SIPC). This protects you if the broker goes out of business, not if your investments fall in value. Other countries have their own schemes.
- Available products. Does it offer the ETFs you want? Fractional shares? Automatic recurring investing?
- Fees. Trading fees, currency exchange fees (often the hidden one), account fees, withdrawal fees.
- Tax reporting. Does it give you clear yearly statements for your tax return?
- Ease of use. You'll use it every month. It should be simple.
Personally I use Trading 212, but it isn't available everywhere, including the US. Choose based on the checklist above and what is available and regulated where you live. I'm not paid to recommend any broker.
Opening your account
Use the Broker Setup Checklist on the Checklists page. You'll usually need an ID, proof of address and a few questions about your experience and finances. Answer honestly. Expect 1 to 3 days for approval.