For people who have taken the audacious step towards investing, you cannot do so without first owning a brokerage account. Technological advancements coupled with the way the internet has infested every nook and cranny of day-to-day financial institutions, and there has never been a better time to invest your funds.
Competitions are rife amongst brokerage firms, with every broker offering new deals, the ability to trade stocks, and even involved in options trading—all of this done to convince you to join forces with them.
Choosing the right broker and right financial planning for your investment should be as important as choosing the right bank for your transactions. One should not outweigh the other. As a young investor, for you to become successful in the journey of investment, you need to properly deliberate on what services and products these brokers offer that will suit your needs.
So, how do you choose the best investment broker that is right for you—in a sea full of brokers?
We’ll be looking at some of the factors that should aid your decision in selecting a broker for your investment. You can view here for more information regarding investments.
Cost per trade
This is a necessity in every brokerage firms. Since the costs can be compared with other competitions, you should take out your time and look at every cost per trade each broker offers. The importance of this cannot be overemphasized. Take your time and investigate all the costs. There are some brokers that have minimum commission off trades from stocks but will not be suitable for you if you mostly invest mutual funds where the commission may not be attractive to you.
Investment options
Flip through the list of brokers and check out the variety of investment options they provide. A young investor should be armed with this information; a good broker offers you the options of investing an assortment of assets, be it bonds, treasury securities, exchange-traded funds (EFTs), options, stocks, futures, real estate investment trusts, and even certificates of deposits. For investors planning to only invest in ETFs, you need to choose a broker that will offer that service, the cost of that service and the possibility of spreading your wings in the future.
Referrals
No matter how convincing a broker ad may be, there are things that may not be apparent to you. Hence, before making the decision to create an account in a brokerage firm, you need to reach out to those who are currently investing in that firm or have been in times past. In the same vein, be careful of relying on opinions of such brokerage comparison sites, as some of them may, in reality, be an affiliate of the brokerage firm you’re planning to join. The best way to spot them is to look at how they present the information. If they provide unrealistic information, donating 5stars to brokers, your suspicion should be piqued.
Minimum Initial Investment
Most brokers have minimum initial investments that run into thousands of dollars. However, there are some brokers with little low minimum initial investments in hundreds of dollars. You should check for the clause in the minimum trades and also the penalty of not abiding by the requirements.
Types of Retirement Account
It is best to confirm the many types of retirement accounts a broker offers before signing up with them. If you want to set up a regular account with plans of opening an IRA or a custodial account for your kids in the future, you need to check if the broker can meet this need. This will not only save you unnecessary research time in the future but will make your decisions easier to make.
Direct Investment Advice
Before you sign up you with a broker, you need to find out if the broker offers direct investment advice, and if there is a charge for that particular service. Most brokers provide limited investment advice and offer you the opportunity of having full unrestricted direct investment advice for a fee. Also, there are brokers that’d charge you for broker-assisted transactions or for advice on a need-to-know basis. You should understand that the reason why most brokers offer low transaction fees is that they offer little or no assistance. You should inquire into the handiness of such services from brokers before settling on anyone—being aware that it could change the structure of charges should you choose them.
Interest on Uninvested Funds
While some brokers offer interests on funds that have not been invested, some don’t. Look out for the ones that do while checking with the other parameters listed above before making a choice.
License.
Perhaps the most important factor to note down is to check if the broker is properly licensed with regulatory bodies like the Securities and Exchange Commission, and the Commodities Futures Trading Commission and other state commissions.
Experience
You need to find out the wealth of experience of a broker before choosing to sign up with them. This also involves finding out the number of training he or she has, plus the strategy and manner they approach investment.
Customer service
Finding a broker who is easily accessible and can attend to your questions and needs should be a top priority when choosing a broker. Check for the variety of customer support (direct phone, live chat, email) before making a decision
Visit Local Office
You can also pay a visit to the local office of the broker and talk to an executive there. If you are impressed with your findings there, you can make the choice of signing up.
When you place all these factors into consideration, choosing a brokerage firm that will meet your needs will not be difficult. Always remember that if you are not satisfied with the services of a broker, you are free to close down your account and choose another broker who understands your needs and gives you value.
