How to Choose the Best Stock Broker

by khalid on 06/09/2012 · 0 comments

Long gone are the days where you have to phone up your stock broker, place a stock order and pay $30. Thankfully, there are hundreds of reputable brokers on the web today that can process your orders for as little as few dollars. But before you set out and sign up with a broker, you may be wondering what you should look out for. Even if you have a broker today, you may want to ask yourself the following questions to make sure that you’re dealing with a reputable company that will be here for a long time to come.

Best Stock Broker

Full Service vs Discount

First, you have to decide what you want the account for. Do you just want to place the orders yourself or do you need the help of someone else? A full service broker will help you come up with ideas, recommend stocks and even assist you with purchasing the stocks. As you can see, this can add up fast. As for a discount broker, you will be on your own.

The Commissions

Since you will be buying the stocks, mutual funds, forex and anything else on your own, it’s important to know what the company is going to be taking from you. Since they have to stay in business, you don’t want to give them too much money. For example, the average stock broker will take $5 to $15 per trade. It’s up to you to determine how much you want to spend.

Minimum Opening Balance

In order to open an account, most brokerages will have a minimum opening balance. This can range from a hundred dollars to as much as a few thousand. If you’re just starting off, you may want to find one that doesn’t require a lot. The only downfall to a lower balance could mean that you may have to pay higher fees. This isn’t always the case, though.

The Perks

What does this broker offer that no other brokerage can offer? For instance, do they have an iPhone app where you can purchase stocks right from your phone? What about reports? Do they offer advanced reports that blow others out of the water? Before you sign up, most brokers will advertise their best features right on the front of the site. Most of them will also let you take a free tour of their website.

Ease of Use

Buying a stock shouldn’t be rocket science. If you’re having a hard time buying a stock or even figuring out the dashboard, you may want to think of something that is a pinch easier. If you can take a tour of the company ahead of time, this is a great way to play around.

Customer Support

While the stock market is only opened during the day, you may need help with your account at 9 p.m. at night after work. Will you be able to get ahold of someone? If so, how can you get to them? You will want a company that has email, a toll-free number and a chat box. The more options you have, the easier it will be to get to them to have your questions answered.

NASD or SIPC

Make sure that this broker is part of the NASD and SIPC. The NASD, which stands for “National Association of Security Dealers will make sure that the company and employees abide by the rules. The SIPC is the investors protection corporation that will protect your investment in case the company fails.

This was a post written by Hannah, and she runs the cost helping website,

http://www.howmuchisit.org

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