Learning How To Choose A Stock Broker
If you are going to go the traditional investing route, finding a good stock broker is one of the most important things that you can do for the health of your investments and to secure yourself a strong portfolio. Because these brokerages will handle all of your transactions and advise you, it is very important that you can trust them with your money and that you feel they will have your best interests at heart. This means that you need to do a little research, spend time figuring out how they work, and you need to be willing to ask questions as well. You also need to keep in mind that your perfect broker may be very different from the broker that your parents or your boss would be using if they chose to invest.
You will likely want to avoid broker-resellers unless you have a very specific reason to go with them. Choosing a re-seller just puts more people between you and your transactions and gives you more chances for things to go wrong. This type of broker will often not interact with you directly and that can lead to a breakdown of communications that could be potentially costly or make you miss important opportunities. If you like the results that a re-seller is getting, looking into which brokerage they are working with directly may serve your needs better.
The first thing that you will want to check is the certifications and industry connections that the brokerage you are looking into maintains. A good company will be able to get into FINRA or have other protections in place via their connections. This will ensure that your investments are being treated with an industry agreed upon level of respect and that you will be protected by their partners and their high reputation should any problems arise. Any company that is unable to make good connections and has chosen to avoid these organizations is likely operating at an unacceptably high level of risk.
Keep in mind that any risks your broker takes will be passed on to you and can potentially influence your profits and leave you with large losses as well. While there are any number of brokers who are willing to talk up their firms and who will tell you that they are the best, a little research will usually reveal people who are actually able to help you with your investments. Sometimes getting this information can be as easy as looking at their information on Google, checking out reviews previous clients have made, or asking on a message board.
You will need to choose between a full-service or a discount service when you look to hire a firm. The difference is the amount of help and advice that you will get when you are investing and the way that your portfolio and case will be treated. If you are looking to get into the markets at the lower levels, a discount service will more than likely meet your needs and will be able to get you started with options that work quite well. If you find that you need more customized services you can usually hire a full-service consultant for short periods of time to get the help you need.
The next thing to look at is the amount you are willing to invest up front and who will take you on as a client with the amount that you have available. While you can start playing the market with as little as $500, there are many companies that won’t take on clients with investments that small, $1000 is a common threshold and many choose to keep their standards even higher. Knowing how much you have to work with before you start looking for a firm can make it much easier and save you from disappointment if you aren’t going to meet the basic requirements.
Learning how to choose a stock broker may the same amount of work as you put into your first few stock decisions. Making sure that you choose someone who is reputable and who works with your style will ensure that you get the best possible results and make the best profits over time.