Things to Consider Before Selecting An Online Broker
If you think picking the right stock, choosing the right mutual fund, or selling at the right time are the most important investment decisions you make in your life, then think again. It’s not that these decisions are not important, but these are decisions you may repeat over a period of time, or decide according to the prevailing market conditions. However, there is one decision that is more crucial than the ones just mentioned. And that is choosing an appropriate online broker.
In the world of investments, brokers are inevitable. They run the show and one has to transact through them, especially in stocks and securities. There are plenty of online brokers available on the Internet. But, how do you go about finding the right one?
Here are a few pointers that will help you to select a suitable online broker:
Availability: Hit the company’s website both during peak trading hours and off-hours. See if it’s easily accessible, and that all the links work perfectly all the time. Check for other technical problems.
Offline options: Since we can’t be online always, check for the offline alternatives that the brokerage firm offers to place orders and execute them. While asking for these alternatives, don’t forget to find out about the charges, as it may be more expensive than online trading. These options can include orders through fax, using touch-tone telephone, or just by talking to the broker over the phone.
Price factor: Usually, prices can be indicative of the quality of service.
One should not open an account with an online broker just because he/she offers the cheapest service. There can be hidden added costs or a tricky clause in the agreement itself, so one should be aware of such things before deciding on a particular broker. The advertised rates differ from broker to broker. You will find the average to be around $20.You could also discover that the advertised commission rate may not be applicable to the sort of trade you want to perform.
Get to know the broker: Find out everything you can about the broker - their history, market standing, service quality, etc. You will get this information by finding out what other people say about the broker. Internet sites like gomez.com and the like are a great source of such information.
Don’t go for discounts alone: When one is new to investing, it’s better to start with a full-service broker. Generally, they possess the required expertise, and are in a position to guide the new investor.
Selecting a product: Most brokerage firms offer many more services apart from trading stocks. Also keep in mind that there are many other investment choices that may not be offered by all companies such as municipal bonds, futures and options, gold and silver certificates, CDs etc. Many brokerages also offer credit cards and other related services.
You may need to pay an initial deposit when you sign a contract with a broker. The minimum balance requirement can be as high as $10000. Some of the brokers pay some interest on the cash amount you keep in your brokerage account. It’s better to enquire about these things, as it will give you an insight of their customer service. Last but not the least, one should not forget to check out the other goodies offered by the brokerage house. If you follow these guidelines, you’re sure to find a good broker within no time.