Choosing the right investment broker

After you have gathered all there is to know about investing and trading, the time has come to put the information and money into action. As a novice trader, the most common question asked is about choosing the right investment broker?

We understand that the sheer number of investment brokers available out there can get a tad overwhelming for someone who is new to the world of trading and investment. But worry not!

We have curated a short and simple guide that lists out the key elements which you should compare for and choosing a broker in accordance with your requirements.

Investment options

The first step is to know what kind of investments you are looking to get involved in. Out of the plethora of trading options, are you looking to trade only stocks or are you also looking at options, futures, bonds, derivatives, commodities, or forex?

This is important because some brokers may be better than others when it comes to certain types of investments and some brokers may even be specializing in only certain categories of trade.

Your activity-level expectations

Are you going to be trading twice a day, twice a week, or twice a month? Your level of activity is important for choosing the right broker in terms of fees and charges.

You want to look at a pricing structure that is suitable for your level of activity and doesn’t take away all your money in commissions.

Brokerage commission and fees

Brokers charge countless fees and charges in the name of account opening or closing charges, commission, transfer fee, inactivity fee, maintenance cost, etc. As a beginner, you want to choose a broker which doesn’t empty your pockets in the name of fees and also provides you with trading opportunities. 

Minimum investment requirement

Many brokers have minimum investment requirements. So if you are just starting out, you can look for some education brokers who allow you to open a zero balance account and teach you the basic concepts with the help of demo and on-demand content.

Education and support for a new investor

If you are just stepping into the world of investment, chances are you require your online investment broker to help you with finding the right investment opportunities. For this, you want to choose a good stockbroker who can assist you in how you initially trading.

Customer reviews: Appraisal and complaints

Like any other service, investment brokers are also reviewed by their customers on various online platforms. Such customer reviews, both good and bad can help you understand the broker better and choosing the right one.

You can also consider personally talking to anyone who you know has used a particular broker’s services.  

Customer service

As a novice investor, you will probably have a ton of questions and problems once you start. So you want to look for a broker which has active and pleasant customer service for you to have an easy transition into the investment arena.

Offers and discounts

Many brokers come out with offers and discounted prices on their account opening charges. Look out for such opportunities to save on that hefty account fees.

Privacy and security

Although this goes without saying, let us still mention this for the sake of your checklist of comparison.

While choosing a broker, you want to ensure that your data is secure and not being sold to third parties and you want to study more about the technology the broker is using to keep your account secure.

Taking a demo

The best way of knowing how well a certain service works for you is by giving it a try. With all the brokers who allow you to open a free account, you can assess the tools they are using and get a first-hand experience of the features they have to offer.

You can decide if you find the broker’s application or website to be user-friendly and easy to navigate and check the quality of resources they have to offer.

Conclusion

In the world of investment and trading, no one can guarantee successful returns, but if you are right in choosing your investment broker, you may just cover the difference between potential success and setbacks.

Frequently asked questions

1. What exactly does a broker do?

• Brokers are individuals or firms who act as intermediaries for investors to exchange security in the market. Brokers generally charge commission for transactions which is a percentage of the value of the exchange.

2. Who pays the commission to a stockbroker?

• The commission to the stockbroker is paid by the investor for every buying and selling of security done through the broker. The rates of commission can vary from broker to broker.

3. What are the different types of stockbrokers?

The different types of stockbrokers are

• Full-service stockbrokers who help you develop a long-term financial plan
• Discount and online brokers who do not provide any financial advice and just take your orders and execute them

4. Can I invest in the share market without a broker?

• Yes. Although the widely preferred and common way of investing in the share market is through brokers, there are also Direct Stock Purchase Plans where you can directly invest in a company’s share without taking the help of any broker.

5. What is a full-service broker?

• Full-service brokers are licensed brokerage firms or individuals who provide long-term financial planning and advice including tax, retirement plans, and more.