How to Choose the Right Stock Broker
Choosing the right stock broker is crucial when you set out on your investment journey as most novice investors do not know how to go about buying and selling stocks to make money. If you think you can jump right in and start investing money in stocks without having a brokerage account and getting help from an experienced broker, you are mistaken.
Being a newbie, there could be many things that you do not know about how stocks work. Follow some important guidelines to help you choose the right stock broker.
Instructions
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1
Choose between full-service broker and discount broker
If you are an experienced investor and have been into stocks for a few years, you should go with a full-service broker. This type of broker provides you with a wide range of services such as tax tips, retirement planning and financial advice on each investment you make. Be mindful that full-service brokers charge bigger commissions than discount brokers do.
If you are a novice investor, you should choose a discount broker. This broker does not demand big commissions but they do not give you investment advice. Working with a discount broker will make you want to do research on your own, giving you a chance to learn investment techniques, while full-service brokers usually do everything for you. -
2
Ask about minimums
If you are ready to open an account with a broker you have just set your sights on, ask them about the minimum balance for setting up the account. Usually, most discount brokers start a client’s account with$500 to $1000. -
3
Ask about withdrawal
Most brokers charge a fee if the client withdraws money from their account. Make sure that you understand all the terms and conditions about withdrawal because you may find it hard to sometimes get money out of your account. Talk to your prospective broker and ask them about the minimum balance that they require for you to make withdrawals. -
4
Check out the fee structure
Sometimes, the fee structure presented by brokers can confuse new investors, so it is recommended that you ask your prospective broker about all the hidden fees that they may not be willing to tell you at the time of your account’s registration with them. Despite this, most brokers offer an almost similar fee structure but you have to be familiar with what is going on behind your back.
