Since this website is about helping you make more money and save money, we bring you today some important information you must know and take into consideration before you hire an online broker.
The explosion of online investing has led to the explosion of online brokers. Most of them are good, and they are much less expensive than traditional brokers.
Although they might all seem to look alike, in part because they all use those fancy-looking investment software, but considerable contrasts exist between online brokers. Some of them have expertise in different areas of investing. Some have access to different types of funds or IPOs. Others cater to frequent traders.
Regardless of your needs and preferences, or your investing principle, there’s an online broker for you.
These tips can help you hire the online broker that best suits your needs:
1. Be Sure You Know What You Want:
Often times, people start out investment without even knowing what they want from the investment.
Smart investors know what they want; they have clear goals and targets. They don’t leave their goals blindly to an investment agent to determine for them.
Do you just want to make a few trades year, or are you an aggressive investor who makes several trades a week?
What is your risk tolerance level, and how much knowledge do you have about investing? Thinking these and many more questions through will help you to know what you really want and therefore, what kind of broker to look for.
- What research instruments are you looking for? The typical buy and hold investor will be interested in the quality of the research tools. Do you require guidance and excellent client support? Is the layout of the website easy for you to understand and navigate?
- A note of caution: while a discount brokerage will be considerably less expensive, they will be more likely to be short on services and advice.
- Are you interested in penny stocks? Mutual funds? IPOs? Emerging markets?
2. Determine your expenses.
Many online platforms will allow you simulate a typical month’s worth of trading, and you can use that to assess your costs.
What are the commission rates and what is the minimum required balance? The commissions can vary depending on the account balance or type.
Watch out for any hidden fees. Many investors consider this to be the most important consideration.In other words, be sure to read and understand the proverbial fine prints well.
- If you’re a frequent trader, those trading fees can add up quickly. The more you trade, the more impact the commission fees will have on your returns.
3. How much interest do you earn on your cash?
It’s challenging to invest virtually every dollar in your brokerage account. Sometimes, you may have a significant amount of cash in your account. How much interest would you earn on that money?
4. You Must Do Your Due Diligence on that Broker
- Read the reviews and see what others are saying. It’s not possible to hide a negative reputation for long. It’s your money; you should do everything to keep swindlers away from it.
5. How safe and reliable is the website?
How responsive is the website during peak hours and off hours? Does the website load quickly?
Can you count on the ability to place orders and do research anytime, day or night? What’s your work-sleep-trading schedule?
6. What products are offered?
If all you want is to buy and sell stocks, any online broker could do. But some brokers also offer the ability to utilize futures, options, Certificate of deposits, precious metals, and municipal bonds. Some even offer a credit card or bank account functionality.
- Many online brokers are increasingly becoming more like banking institutions.
7. What perks do they offer?
To attract new clients, online brokers often offer significant incentives. For example, you might receive a certain number of free trades. See what they have. If you like what you see, there is nothing wrong in taking them up on the perks, even if to test-drive their services.
8. Is mobile important to you?
Many investors only require access from a computer, while others like mobile access. Are apps available for effective mobile trading? Those interested in high-volume trading often require mobile access. If you travel a lot, having mobile access to your investment account will make a lot of sense.
Online brokerages offer incredible potential and flexibility. The tools, speed, and services provided by online brokers today exceed the offerings of full-service brokers from the recent past. This is a good time to be an online investor.
Determine your needs and compare the costs. Do not pay for services and tools you don’t need. With a little home work, you can find and hire the online broker that best suits your investing style.