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Picking a Broker
Everyone needs a stockbroker to in order to buy shares of a company’s stock. Some examples of stockbrokers are Scottrade, Merrill Lynch, E*Trade, Charles Schwab and many others. Brokers make money when you trade. Every time you buy or sell a stock, they earn a commission. This can be anywhere from $3.99 to $15.99, depending on the broker.

There are two types of brokers, Full-Service and Discount.

Full-Service Broker – A broker that provides clients with research, advice, retirement, and much more. Because full-service brokers do a variety of tasks for you, their commissions are much higher than those of discount brokers.

Discount Broker – A broker that fulfills buy and sell orders at a reduced commission or price compared to a full-service broker. Discount brokers do not provide any research, advice, or any other services.

If you are new to investing or have are planning on investing a large sum of money, you may want to get a full-service broker, if you can afford it. If you want to do your own research and be responsible for your own money, use a discount broker.

Many people only look at the price when researching a broker. Choosing the broker with the cheapest commissions is not always the best way to determine the best broker for you. It may not matter much with discount brokers, but with full-service brokers, this is a huge mistake. Many investors jump into an account with a broker with no knowledge of their business history, expertise, or ethics. Make sure to research the firm you are planning on investing with. Make sure that they are not in any legal trouble or anything of that nature.

The most important thing one can do when picking a broker is to ask questions. Do not be shy.

Online trading is getting more and more popular. It is very easy and we recommend it to everyone. Many more people feel comfortable investing from their computers rather than calling their broker. Online brokers also usually cheaper than trading with a live person.

Most brokers require a minimum opening balance. Typical minimum opening balances are around $1,000. Some are lower, and some are higher. Some companies may charge maintenance fees if your balance falls below a certain amount, so be sure you know about these before you get charged a fee.

Brokers also offer a variety of investment tools. Some offer free incredible research tools, while others may offer live level 2 services. Make sure to check out the tools each broker offers. A higher commission price may be worth it if you get top notch research tools.

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