Choosing The Right Broker
How to find the right broker for you? Let's rule out the dartboard, first off. We can narrow your search to just 6 tasks that will help evaluate your needs – and decide which broker fits best.
* Evaluate your needs
- Investing experience – Beginner, pro, or in-between? The answer tells you whether you'll need educational support (most beginners do) or more complex tools or trading choices (some pros do).
- Amount to invest – Starting with $100 or $10,000? Do you plan to continue investing regularly, or invest lump sums when you have them? These answers indicate whether you'll eliminate some brokers for investment minimums.
- Investing strategy – Watch the market closely and immediately jump on opportunities? Or invest slowly and steadily over time? The first requires real-time trading (buy/sell right now); the second can use dollar-based investing (more on that later).
* Evaluate brokers
- Services offered – Poke around their educational resources, take demos, try out their tools, look for the investment types you want (stocks, mutual funds, exchange-traded funds (ETFs), options, margin trades), etc.
- Trading method – Are you a do-it-yourselfer when placing trades (immediately online) or a do-it-for-me person (call or tell your broker in person to handle it)? What does the brokerage specialize in?
- All the costs – Brokers rarely have just one. Check the transaction cost (how much to buy or sell an investment), inactivity fee, maintenance/account fee, and add-on charges (investment advice, phone trades, advanced tools, etc.).
Once you decide on a broker, open an account and get started right away. Keep in mind, you're not stuck with your choice. If your needs change or your broker isn't all you'd expected, take your investments elsewhere. Just not to the dartboard. After all, they're your investments.
The above story is the opinion of the author only and it does not reflect
iStockAnalyst opinion. Further, the author is not personally advising you
regarding the suitability of the story for your investment needs. In no event
iStockAnalyst will be liable for any loss or damage including without
limitation, indirect or consequential loss or damage, or any loss or damage
whatsoever arising from or arising out of, or in connection with the use of this
information. Please consult your investment advisor before making any investment
decision.
