Collaborative Dividend

What To Look For When Choosing A Stock Broker

Google+ Pinterest LinkedIn Tumblr

It’s a great time to be an investor as competition among online brokers is fierce, which means costs are coming down and services are being ramped up. Choosing the right stock broker comes down to you and your preferences, some people are willing to pay higher trade commissions for a state-of-the-art platform; others count costs above all else. So which of the brokers is best for you?

First of all, you need to look at the broker’s commissions, account minimum, account fees, and your trading style and tech needs.

If you’re looking for an online broker, they generally offer a similar menu of investment options: individual stocks, options, mutual funds, exchange-traded funds, and bonds. Some will also provide access to futures trading and forex (currency) trading. These will determine whether your investment needs will be satisfied, and how much you will pay in commission. Pay careful attention to the commissions associated with your preferred investments.

You can find highly ranked brokers with no account minimum, including TD Ameritrade, Merrill Edge, Interactive Brokers, Schwab, Stockpile and Ally Invest, but some brokers do require a minimum initial investment, which can be around $500 or more. Many mutual funds also need similar minimum investments, which means even if you’re able to open a brokerage account with a small amount of money, it could be a struggle actually to invest it.

You may not be able to avoid account fees altogether, but you can certainly minimize them as brokers will charge a fee for transferring out funds or closing your account. If you’re transferring to another broker, that new company may offer to reimburse your transfer fees, at least up to a limit.

Most other fees can be sidestepped by merely choosing a broker that doesn’t charge them, or by opting out of services that cost extra. Common expenses to watch out for include annual fees, inactivity fees, trading platform subscriptions and extra charges for research or data.

If you’re just starting as an investor, you probably won’t need extras, like an advanced trading platform. But you may want an education including videos and tutorials on the broker’s website, or in-person seminars at branches. Many brokers offer these services free to account holders.

Also, make sure you look out for promotions. Like many companies, brokers frequently entice new customers with deals and offer a number of commission-free trades or a cash bonus on certain deposit amounts. Don’t choose your broker solely on its promotional offer – a high commission over the long term could easily wipe out any initial bonus or savings – but if you’re stuck between two options, a promotion may sway you one way or the other.

Check out reviews of brokers before doing anything, you can find them on sites such as markets.com review, these are really helpful for finding out all the information you need.

 

Comments are closed.

Tweet
Share
Pin
Share