Best Brokers For Long-Term Investing
Finding the best brokers for long term investing can prove challenging. Buying and holding assets for an extended time can be a successful and profitable trading avenue and this guide aims to help you find the best brokers for long term investing, whether you are in the UK, Europe, India, Singapore, Philippines or Australia. This article will run through what long term investing is and how it works. We also cover the different types of long term investing, the best assets to trade and how to compare top brokers.
Best Brokers For Long Term Investing
These 5 brokers provide the best suite of instruments and trading conditions for long-term investors:
#1 - Forex.com
Forex.com boasts a global reputation with multiple awards and 20+ years experience. Regulated in the US, EU, UK and Canada they provide a huge range of day trading markets, not just forex, and offer competitive fees on a cutting-edge platform. The brand also provides a suite of additional tools, from performance analytics and SMART Signals to advanced charts and strategy builders.
"Forex.com is an excellent broker for active forex traders with over 80 currency pairs, tight spreads, low commissions and powerful charting platforms for day traders. "
- DayTrading Review Team
- Instruments: Forex, Spot Metals
- Regulator: NFA, CFTC
- Platforms: MT4, MT5, TradingView, eSignal, AutoChartist, TradingCentral
- Min. Deposit: $100
- Min. Trade: 0.01 Lots
- Leverage: 1:50
Pros
- Beginner-friendly web platform and mobile app
- Excellent trading tools including Trading Central, SMART Signals and MetaTrader 4
- Industry-leading pricing on popular forex assets starting from 0.0 pips
Cons
- Investment offering varies between countries
- $15 monthly inactivity fee
- No copy trading platform
#2 - Interactive Brokers
Interactive Brokers is a leading global brokerage that provides access to a comprehensive offering of stocks as well as forex, futures, metals, bonds and cryptos. The firm has over 40 years experience in the online trading industry and is heavily regulated by SEC, FCA, IIROC, and SFC. Day traders can use the proprietary Trader Workstation and can access powerful tools and data feeds as well as comprehensive educational resources.
"Experienced day traders seeking a regulated broker with sophisticated trading software and very low fees should look at IB. Their range of stocks also can't be beaten."
- DayTrading Review Team
- Instruments: CFD, Forex, Stocks, Crypto, Futures, Options, Commodities
- Regulator: SEC, FCA, IIROC, SFC
- Platforms: AlgoTrader, OmniTrader, eSignal, TradingCentral
- Min. Deposit: $0
- Min. Trade: $100
- Leverage: 1:50
Pros
- Diverse payment options and account currencies
- You have a reliable real-time market data feed, that rarely goes offline
- Direct market access, including to the FTSE 100 index, the CAC 40 and Germany’s DAX 40
Cons
- Accessing products like CFDs is not straightforward compared to competitors
- Platform and web interface are complex and difficult for beginners to pick up
- Due to the pricing structure, this firm can be more expensive for aggressive traders who trade over $100,000 shares a day
#3 - NinjaTrader
NinjaTrader is a US-headquartered and regulated brokerage that specializes in futures trading. There are three pricing plans to suit different needs and budgets, as well as ultra-low margins on popular contracts. The brand's award-winning charting software and trading platform also offers a high-degree of customization and superb technical analysis features.
"NinjaTrader is well-positioned to meet the demands of active futures traders looking for low fees and premium analysis tools. The platform hosts top-rate charting features with custom indicators. "
- DayTrading Review Team
- Instruments: Forex, Stocks, Options, Commodities, Futures, Crypto
- Regulator: NFA, CFTC
- Platforms: NinjaTrader Futures, eSignal
- Min. Deposit: $50
- Min. Trade: 0.01 Lots
- Leverage: 1:50
Pros
- Low fees with $50 day trading margins & commissions from $.09 per micro contract
- Widely respected and heavily authorized by the NFA and CFTC
- Excellent trading software for active day traders with bespoke technical indicators and widgets
Cons
- Withdrawal fee on some funding methods
- Non forex and futures trading requires signing up with partner brokers
- Premium platform tools come with an extra charge
#4 - eToro USA
eToro is a social investing platform that offers stocks, ETFs, options, and crypto. The broker is well-known for its user-friendly community-centred platform and competitive fees. With FINRA and SIPC oversight and millions of users across the world, this brand is highly respected. eToro securities trading is offered by eToro USA Securities, Inc.
"eToro is a top pick for traders looking for social investing and copy trading. With a low deposit, zero commissions and an intuitive platform, the broker will meet the needs of newer traders."
- DayTrading Review Team
- Instruments: Stocks, Options, ETFs, Crypto
- Regulator: SEC, FINRA
- Platforms: Own
- Min. Deposit: $10
- Min. Trade: $10
Pros
- A free demo account means new users and prospective traders can try the broker risk-free
- eToro USA Securities is a trustworthy, SEC-regulated broker that is a member of FINRA and SIPC
- The $10 minimum deposit and straightforward account opening process means beginners can get started quickly
Cons
- Narrower range of instruments than some competitors
- Average fees may cut into the profit margins of day traders
- Execution speeds trail the fastest brokers
#5 - OANDA US
OANDA is a popular brand offering exceptional execution, low deposit requirements and advanced charting and trading platform features. The top-rated brand has over 25 years of experience and is regulated by trusted agencies, including the NFA/CFTC. Around the clock support is available, alongside flexible contract sizes and automated trade executions.
"OANDA is an excellent broker for US day traders seeking a user-friendly platform with premium analysis tools and a straightforward joining process. OANDA is also heavily regulated with a very high trust score."
- DayTrading Review Team
- Instruments: Forex, Crypto
- Regulator: NFA, CFTC
- Platforms: MT4, TradingView, AutoChartist
- Min. Deposit: $0
- Min. Trade: 0.01 Lots
- Leverage: 1:50
Pros
- Low minimum deposit for beginners
- US clients accepted
- The OANDA web platform offers advanced price charts and graphs
Cons
- Customer support not available on the weekend
What Is Long Term Investing?
We need to understand what long term investing is and how it works before we break down the best brokers for long term investing. When people refer to long term investing, they usually mean buying stocks, bonds or forex and holding on to it for a significant amount of time, such as months or even years. Anyone with a pension is already investing in the long term. With a pension pot, daily fluctuations do not matter so much, the important factor is consistent growth over an extended period, with the goal being a healthy balance come retirement.
Long term investments work in a similar way to standard trading and day trading, just over a longer period. The same research and preparation are required but, instead of looking at daily price charts for different assets, you need to look over longer periods like a year or multi-year chart. Long term investing is all about growth. If an asset is showing steady growth over a year or longer, it will likely be a good investment. The daily fluctuations are insignificant, sometimes the assets may be down and sometimes they may soar, but all that matters for investors is the overall growth. Investors may look to hold long term investments in companies that have shown steady growth and have reason to keep in that same vein.
Types Of Long Term Investing
When it comes down to it, there are many different types and forms of trading offered by the best brokers for long term investing. Here, we will go through a few different options and explain them. There are two mindsets when it comes to long term investments. Firstly, you have held to maturity investments. This is when you purchase an asset or entity which you wish to keep until it has completely matured, with no intention of selling.
The opposite of this is available for sale investment. With an available for sale investment, the trader purchases the asset intending to sell in over a year. It is still a long-term investment, as the asset will be held for a significant time, but the goal is to sell the asset eventually.
Diving down the rabbit hole of stocks, there are a couple of different instruments offered by the best brokers for long term investing that you could go for. The first type is dividend stocks. As the name suggests, these are stocks that pay dividends, giving investors a regular cash pay-out. Typically, stocks offering dividends are from older companies that have less need for their cash. Generally, these are a safe stock to go for. They are unlikely to skyrocket and earn loads but they produce a regular income.
That brings us on to another type, growth stocks. These promise high growth and high investment returns. A lot of the time these stocks are tech companies. Generally, all profits go back into the business and product, so they are unlikely to pay out large dividends. This type of long-term investment is very risky, stock prices can plummet when things go wrong but the success stories speak for themselves. Facebook, Amazon and Apple are all great examples of how far these growth stocks can go.
Long-Term Investing Vs Day Trading
Long-term investing and day trading are two very different forms of trading and, while some firms will support both, the best brokers for long term investing likely offer more specialised services. While the obvious difference between the two approaches is the time an asset is held, there are other variations in the two styles. Day traders are working over very short periods. Typically, an investor will purchase an asset and look to sell it within hours, minutes or even seconds. When buying a stock, the intent is to sell it as soon as it hits a certain price. Equally, when shorting (selling), the intent is to buy it back when it’s dropped to a certain value. Day trading requires a significant amount of concentration and effort. Investors must constantly check the market and charts to ensure they sell at the right time, only to rinse and repeat the process many times throughout the day. High fees can be incurred through day trading as commissions are generally charged on each purchase and sale.
Long-term investing is almost the opposite of this. When an investor purchases an asset as a long-term investment, they are not looking to sell any time soon. Typically, they will hold the asset for months or even years. The intent is to hold the asset and allow it to gain value over time, rather than waiting for it to hit a certain price. Similarly, investors will sell the asset only once they can make a significant gain on it. Long-term investors do not have to spend as much time and effort monitoring the market. After the initial research and purchase, small fluctuations do not matter, they can check price charts at their leisure safe in the knowledge they will not be selling for a while. The fees are usually lower as there is only one sale after a long period. The main fee incurred by long-term investors is management fees.
Assets Suited To Long Term Investing
While CFDs may be cheap and offered by some of the best brokers for long term investing, they are not suited to such strategies. CFDs usually incur overnight interest charges. When you are selling on the same day or the next day, this does not matter, however, when you are looking to hold for months or years, these charges will build up and cost a lot more than the CFD is worth. Spot investments are a much better option. These are charged a commission when you sell but there is no interest or overnight holding fees. This suits long-term investments as it allows you to hold for as long as you want, without worrying about fees being incurred for the length of time.
In terms of specific assets to purchase, stock funds and ETFs are often considered a great way to go. If you purchase a broadly diversified fund, such as an S&P 500 or Nasdaq-100 index fund, you will get a range of company stocks, both high-growth and high-dividend. These assets generally experience consistent growth and often recover from drops, for example, even though the S&P 500 dipped during the 2008 financial crisis, it had recovered to its previous level within a few years and kept growing.
Bonds are another great asset offered by the best brokers for long term investing. When you buy a bond, you are essentially lending money to a company, corporation or government entity. This gives them the cash they need, while you earn interest on the repayments they make. Generally speaking, there is a low risk attached to these bonds. You are unlikely to get incredibly rich trading bonds but you will make a steady income over a long period.
Pros Of Long-Term Investing
These are the key benefits of finding the best brokers for long-term investing and capitalising on this trading style:
- Lower risk
- Less trading fees
- Can earn dividends
- Less time-consuming
- Ride out market bumps
Cons Of Long-Term Investing
Our research showed these to be the disadvantages of long-term investments:
- Patience is required
- Lots of fundamental research required
- Could be long periods before profits are realised
- Generally lower annual returns than successful day trading
How To Compare The Best Brokers For Long Term Investing
So, you are looking for the best brokerage accounts for long term investing. Comparing different brokers can be difficult, so we have compiled a list of things to check for when you are trying to find a broker:
- Minimum Deposit: Look for brokers with lower minimum deposits, it will mean you do not have to put up as much capital upfront and can trade at an amount you are comfortable with.
- Funding Methods: What payment methods does the broker accept? Find a broker that accepts forms of payments you can use and does not charge high fees for deposits and withdrawals.
- Assets Available To Trade: When you are picking a broker, ensure they offer the assets you want to trade. If you are looking for stocks, check the stock exchanges they offer. If you want to trade forex or bonds, make sure they offer these.
- Trading Platforms: Check that the broker offers trading platforms that suit you. If you want to conduct trading on the go, check for a mobile trading platform.
- Fees & Commission: This is one of the most important ones. Long-term brokers may charge fees, such as annual maintenance charges (AMCs). Compare the fees of different brokers and try to find a suitably low one. Also, check what commission will be charged when you close trades.
- Customer Support: Compare the different levels of customer support offered. Ideally, you want a broker that offers 24/7 customer support with a range of methods for you to get in contact.
Long Term Investing Strategies
Strategies are important at any level of trading, and long-term investing is no different. These tips will help you build your strategies and trade effectively.
Diversify
Holding a diverse range of assets is the key to trading successfully, whether you are with one of the best brokers for long term investing or not. Firstly, you want to ensure you are not only investing in high-risk assets like stocks but also purchasing bonds and other assets that are more steady. Secondly, holding a diverse portfolio leaves you less susceptible to market downturns. Yes, some of your assets may go through a hard time but diversification should ensure some of them will still perform well.
Separate Emotions
Do not think of an investment as you would a sports team. Be open-minded with investments, they will not all come off and you must be ready to ditch a loser. It is not worth staying with it just in case of an upturn, sell it and move on to the next investment.
Start Early
As a general rule of thumb, the sooner you start investing, the sooner you reap the rewards. Start investing in long term assets as soon as possible. The quicker you practise, make mistakes and learn from them, the sooner you will start consistently making money.
Final Word On Best Brokers For Long Term Investing
Signing up with the best brokers for long term investing can open the doors to a profitable avenue, free from the constant chart checking of day trading. Many assets are suitable for long-term investing, some of which carry more risk than others, but all have the potential to earn large profits. Follow our comparison guide to find the best broker for you for long term investing.
FAQs
Will I Pay Tax On Profits From Trading With The Best Brokers For Long Term Investing In The UK?
Profits are often subject to tax with long term investing strategies. Depending on the amount of income, you may be required to pay capital gains tax or even income tax.
Do The Best Brokers For Long Term Investing Charge Overnight Fees?
Many of the best brokers for long-term investing do not charge overnight fees for most financial instruments, instead charging commissions. However, CFDs often incur overnight interest swaps, so be sure to check before opening any trade.
Can I Trade CFDs On A Long-Term Basis?
Yes, you can. However, they are likely to incur overnight fees, which will increase over time and likely wipe out profits that you earn over time.
Are Stocks Or Bonds Better From The Best Brokers For Long Term Investing?
Investors may do well from investing in both. Stocks are higher risk but have the potential for greater growth, while bonds are steady and should provide a safer income.
How Often Should I Check Long-Term Investments?
You do not need to check charts as much as you do for day trading. Check as much as you feel comfortable with, be it once a week or once a month, safe in the knowledge that you do not intend to sell for a while and dips may be overcome.