Looking for a stock broker – sifting the gold to the top
If you’re interested in buying stocks, you’ll need the help of a stockbroker. A stockbroker is licensed to purchase securities on your behalf. You’ll also need to find out what sort of stockbroker is right for you.
Stockbrokers can be broken down into three categories. Some are cheap and simply take orders, others are quite expensive – providing a full service of detailed financial analysis, advice and recommendations.
they are these
Online/discount brokers
If you feel you are knowledgeable enough to take on the responsibilities of directing your own investments, or if you want to learn how to invest without making a large financial commitment, this is the way to go.
This kind of broker is simply an order-taker. Since there is no physical office to visit, no certified financial planners to help you and little overheads, it provides the least expensive way to start your investing.
The only way you can contact a broker like this is over the telephone, or through the Internet.
You can open an account with relatively little money and the costs are usually based per transaction or per share basis. The account, which you would open with an online broker, allows you to buy and sell stocks instantly with a few clicks of the mouse.
However, you’re on your own in a veritable landmine field as these types of brokers provide absolutely no investment advice, stock tips or any type of investment recommendations.
They will provide technical support for the online trading side of things but that’s about it.
It’s not unusual for the online brokers to offer hyperlinks to investment-related sites, resource and research sites – but these are usually third-party providers and you run the risk of more spam in your inbox.
Discount brokers with assistance
This kind of broker is exactly what it says it is. It’s a discount broker and the assistance may be nothing more than a bit more information and resources to help you with your investing, usually stopping short of giving investment advice or recommendations.
You’re also liable to get charged an additional fee for this assistance.
They can be also the same companies as your basic online/discount brokers that offer upgradeable accounts or services. For example, they may offer more in-house research and reports or publish investment newsletters with investment tips.
Full-service brokers
The full-service brokers are the traditional stockbrokers that work out of an address, and there you talk to somebody face-to-face who will take the time to understand you personally and financially.
The “full-service” in full-service brokers means that they work with you to develop a financial plan best suited to your investment goals and objectives. They can also assist with estate planning, tax advice, retirement planning, budgeting and any other type of financial advice.
They look at factors such as: marital status, lifestyle, personality, risk tolerance, age (time horizon), income, assets, debts and more. They can help you manage all of your financial needs now and for the rest of your life, if need be. These types of brokers are for those who want everything in one package. In terms of fees, they are a lot more expensive than discount brokers.
The key to successful investing is to minimize the fees and expenses you’re going to be charged by your broker.
Most discount brokers charge less than $10 commission per trade, regardless of the size of the trade.
Depending on your criteria, some brokers may even offer a certain number of free trades, so make sure you read carefully before committing to a broker. The best brokers also offer no fee dividend reinvestment, good customer service, and various research tools for customers.
Avoid pure speculation in stocks.
People speculate about stock all the time – but smart investors use smart speculation. If a trade knows what he’s doing then he can just as safely trade with an online broker. However, he should always consult with a financial advisor.
Pure Speculation is simply guessing and without adequate information you can stand to lose a lot of money.
Pure Speculation can be buying and selling too frequently trying to make a fast profit within months, chasing the hottest stocks (stocks with the biggest recent gains), also known as “momentum investing”, feeding the dogs (indiscriminately buying stocks with the biggest recent losses or trading at low valuations), penny stocks (extremely volatile, but with honest advice and accurate then returns may be substantial), buying stocks on margin, short selling, buying options and financial futures.
If you thinking about investing, track a particular company’s stock for a good deal of time and make sure it’s goal is expansion and striving towards something of substance, and not just hype.
Ready for Action?
Contact your chosen broker or firm and request an application. Many firms offer online applications, although most require that you send a check or wire money to actually open the account.
You’ve got money in your account – It can take a few days to open a brokerage account, so don’t expect to be able to trade on the same day you decide to open an account. When you’ve got the green light, put your investment-mobile into gear and go for it!
Some useful tips to keep in mind.
Happy Investing!
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