Factors to Consider When Picking a Stock Broker

In the world of stock trading, stockbrokers are common because most investors either do not have the time to trade or they simply do not trust themselves to do it right.

As you can imagine then, a stockbroker can make or break you if you decide to use one. can make or break you.

Here are some of the factors you need to consider when choosing a stockbroker to minimize your chances of failing in stock trading.

Cost Per Trade

This is perhaps the holy grail in the stock trading world. Now, since you are looking at a number here, you can easily make comparisons. However, you do not want to depend on a single cost like a stock trade seeing as stockbrokers usually have a broad array of assortment fees.

You, therefore, want to assess all costs. While one broker may have a low commission for trade on stocks, it will not be beneficial to you if you mostly invest in mutual funds or trade options because commissions are not as attractive.

Required Minimum Initial Investment

As you search for a stockbroker, you will realize that most of them have a minimum investment requirement which may not be so little. As a new trader with little or no capital to invest, it will not matter how good your broker is if you can raise the money required to pay for the minimum investment requirement.

Of course, some brokers do not have minimum requirements or will require just a few dollars. You want to pick a broker based on what they charge and what you can afford.

Available IRAs

A good stockbroker will have different kinds of retirement accounts that you can invest in. This doesn’t mean that all of them do that though so it would be advisable to find out that from the start.

Even if you just want a regular investment account, chances are that you may want or need an IRA in the future or a custodial account for your kids.

Checking to see if such options are available before signing up for a brokerage account can save you a lot of trouble in the future.

Appropriate Asset Distribution Guidance

When it comes to investing, asset allocation has to be one of the most challenging areas particularly for new investors. It can be difficult to determine asset allocation in the beginning and even going forward.

Asset allocation requires periodic rebalancing, which when done manually is not the easiest. To that effect, you want to find a broker offering this service and find out if they charge separately for it.

Website Usability

One of the most crucial considerations when scavenging for a stockbroker is their website. Things like low commissions are fantastic but if the platform is hard to use, that won’t matter. Most investors don’t appreciate long and cumbersome processes when placing trades so if this is a concern for you, be sure to check different broker websites to see how user-friendly they are.

Investment Advice

Since you have already decided to use a stockbroker to handle trading for you, it is necessary to find out if the one you pick offers any investment advice and whether they charge for the same.

You see, some stockbrokers offer some investment advice while others will provide all the advice you need at a fee. Others will charge to give the advice any time you need it. This is particularly true when you need to place trades with the help of a broker.

Keep in mind that most of the brokers who charge low transaction fees do so because they offer little to no assistance. As such, you want to find out if this is the case and decide if you are okay with it.

Investment Research Access

To trade successfully, you need access to investment research information through your stockbroker. This not only saves you money but is convenient as well. Mutual fund research and purchasing stock research can be expensive.

A stockbroker who offers the same without charging is a gem that you should hold on to if you want to cut your trading expenses.

Bottom Line

Many people have made it in the stock trading field simply because they enlisted the services of stockbrokers and it can be the same for you. However, you need to be careful when picking one and by considering the factors we have discussed, you set yourself up for success.

In the world of stock trading, stockbrokers are common because most investors either do not have the time to trade or they simply do not trust themselves to do it right. As you can imagine then, a stockbroker can make or break you if you decide to use one. can make or break you. Here…

In the world of stock trading, stockbrokers are common because most investors either do not have the time to trade or they simply do not trust themselves to do it right. As you can imagine then, a stockbroker can make or break you if you decide to use one. can make or break you. Here…