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How To Find The Best Online Stock Broker

By Edited Nov 5, 2016 0 0

Stock Market(92188)
Credit: http://commons.wikimedia.org/wiki/File%3ANYSE-NYX.jpg

Odds are that at some point in the last few weeks, you have either been watching TV or reading a website and been hit with an advertisement from an online stock broker.  Each of them claim to have the best commissions, fastest platform and superior technology, regardless of whether you are a professional day trader or just watching your ten shares of an old blue chip stock slowly (and hopefully) appreciate!  It is easy to become overwhelmed when trying to pick an online broker, particularly if you are new to the game.  Here are some things to consider when making your final decision:

1) Determine your level of experience and comfort with investing.  If you are just opening an account for the first time, you might want to consider a stock broker that offers educational resources – whether in person, online, or both – to help guide you and learn the ins and outs of investing, what strategies to use, how to do taxes, etc.

2) Think about how many trades you will be making on a monthly basis.  Newer investors likely will not be trading that actively in their accounts, so may not mind paying a bit more in commission if the broker offers a wide array of research and technology.  But here is a little secret: most of the brokers that you see in advertisements will not be offering the lowest commissions.  How do you think they pay for all the famous movie stars to narrate their commercials?  With your commission money!  Do an online search for “low cost stock brokers” and compare.  You will find at least a handful of brokers that offer much better commissions, and still provide the same product offerings, technology and guarantees.  A few financial publications also publish annual their list of the top brokers, so you can compare them there as well.

3) Does the broker offer a mobile platform?  Most of them do nowadays, and it is always nice to have the ability to check on your account even if you’re away from a computer.

4) What sort of retirement products, if any, do they offer?  Many of us already have too many accounts with too many passwords and usernames, and being able to utilize your day to day broker for retirement products like an IRA is definitely an added benefit.

5) For those with more experience, consider what kind of margin rates they are offering.  If you do plan on investing using margin (money borrowed from your broker), you will have to pay interest on it.  Most margin rates are painfully high, but shop around if you plan on adding that level of sophistication to your account.

6) Does the broker offer automatic integration with your online tax preparation software?  This is definitely a convenient option to have and a huge time saver, as you are in charge of reporting all of your realized sales to the IRS.  Typing your trades manually into your tax software is a big headache.

There are many factors to consider when choosing an online broker, so make sure to do your homework, and don’t be afraid to pick up the phone and call the broker.  Most of them are extremely helpful in answering questions you might have, and may even be willing to negotiate things such as commission and margin rate if your account is large enough!

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