Normally, individual investors need the services of a stockbroker to buy and sell stocks of stocks and other investment products. Your assortment of options is wide, spanning from full-service brokerage houses, such as Charles Schwab or Morgan Stanley, to bare-bones online-only outfits like E-Trade, Scottrade and Sharebuilder. Which kind of brokerage you go with depends on your investing needs and comfort level.
Telephone the brokerages you are considering. Pay a visit to their websites. Document the commission fees each company charges for stock, bond, mutual fund and other types of trades. As the Motley Fool website notes, full-service brokerages charge higher commissions than online brokers since they offer a wider selection of investment products and information. Additionally, stockbrokers at businesses tend to get paid on commission.
If they allow margin trading or options, ask. All full-service houses make both accessible. Discount brokerages perform also. In any case, use caution as both approaches are not acceptable for novices. Option trading involves betting that a stock will rise or drop by a certain date, while a margin account lets you borrow money against your account’s equity to boost your purchasing power.
Research each firm’s website. Even full-service brokerages tend to give customers online access to their accounts to conduct research, create trades and update personal info. Some websites are simpler to use than many others. If you place limit orders or want to create trades inside an IRA, for example, be certain that the agent’s site allows for such moves. Otherwise, you’re going to end up on the telephone making trades the site will not allow, which generally translates into greater prices.
Ascertain whether someone is available to answer the telephone. As you might want online powers, it’s wonderful to know you can call in to make a trade or ask a question. Full-service brokerages typically allow you to run any sort of trade over the telephone. Some reduction companies offer restricted telephone alternatives, frequently through an automatic system as opposed to an individual being. Others are no-frills, operating entirely online.
Read the fine print. Like banks, brokerages frequently use seemingly hidden fees. For instance, if you open a brokerage account with a mutual fund firm, it might charge higher commissions to exchange mutual fund grants from other businesses. See whether it costs a fee because of transfers or excessive trading.