There is no shortage on brokerage firms. In order to buy stocks and many other investments, you need to set up an account with a broker. You can’t buy your own stock at the stock market, they have to do this for you.
Fortunately, you have many choices when it comes to finding good stock brokerage firms. Some firms are very expensive because they offer a lot of hands-on help with investment professionals. If you don’t feel comfortable making your own investments, this might be the best approach.
Some investments, including CDs, mutual funds, and bonds, can be purchased through a bank. If you want to start a 401K, you need to talk to your employer about setting one up. If you want to invest in almost any other security, such as corporate bonds, stocks, currency, commodities, etc., you’ll need a broker.
Discount Stock Brokers
Discount stock brokers have been around for a few decades. They offer trades for much lower fees because you’re expected to do all the research and choosing yourself. If you plan on doing this anyway, a discount broker is the best way to save more on fees. The less you pay for fees, the more money you have to invest.
Online stock brokers have recently become more commonly used. These discount brokers are able to charge even lower rates, and they add the convenience of online investing. You can invest right from your own home.
What to Look for in a Broker
Decide if you want to work with a full service or online broker. Once you’ve decided, make a list of the top brokers in that category. The broker I use is Sharebuilder.com. You can learn more about Sharebuilder here.
Put the brokers side by side for comparison. Compare each aspect of each broker for a fair comparison.
How much do trades cost? What types of investments do they trade? What research tools do they offer? Which one has been around longer? What kind of reviews does each get?
Getting a review from existing customers is important because it gives you a more honest look into the company. For example, if the trades are slow, the broker isn’t going to tell you that, but someone who has invested with them will.
Security
Make sure the broker you choose has strong security in place. You are planning to give them your money. You need to be able to trust them. There should be actions in place that make their website secure. With all the internet crime these days, internet security is important.
Once you’ve chosen a broker, set up your account and start investing. Most online brokers will require you to fax or mail copies of some documents. This will take it a little longer to complete the process, which is why it’s a good idea to set up a brokerage account as soon as possible.