Choosing an Online Stock Broker
If you want your equity investments to be profitable, you need to use a brokerage service that matches your investment goals.
Company services should also match your educational needs and learning style. Beginner investors should select the best online broker. It’s easy to be wowed by online brokers with no deposit bonus advertise their services online.
There is no guarantee of return on investment when it comes to investing in stocks. However, choosing the right online brokerage will go a long way in reducing the risks involved.
Below are the critical factors you should take into account when choosing, reviewing and evaluating an online stock broker:
Cost per transaction
Cost per transaction is an important factor when choosing online stock brokers. Because it is a number, it is easy to compare different companies. However, you need to be careful not to focus on just one cost, like the cost of trading in stocks, as brokers usually have different fees. Therefore, be sure to carefully consider all costs. Check out online resources that compare brokerage fees to help you make a decision.
Minimum initial investment
All brokers have a minimum initial investment requirement. For some it could be thousands of dollars. If you are new to investing with online brokers with little capital to invest, it may not matter that a broker is the best in the business if you cannot meet their minimum initial investment. In this regard, go for a reputable online broker who requires a minimum initial investment that you can afford.
Perhaps one of the most important things you should consider is a broker’s website. Choosing a broker that offers low commissions is great, but if their online platform is confusing, you have a problem. Therefore, if you are a new investor learning the trade, you should look for a company with a site that is easy to navigate and use. In addition, the site should contain clear instructions on what a user should do at each step. The broker’s website should also have a error handling mechanism which ensures that users who make mistakes can correct them and keep moving forward.
Investment options available
Before settling for a stock broker, check out the investment options they offer. A good broker should offer his clients the opportunity to invest in a wide range of assets. The assets to look for are:
- Certificates of deposit
- Treasury securities
- Mutual fund
- Real estate investment funds
- Exchange Traded Funds (ETFs)
Even if you are planning to invest in a particular asset now, you should consider the possibility of expanding your portfolio in the future. For this reason, you should go for a stock broker who can offer you all the possibilities.
Asset allocation advice
Asset allocation is generally a difficult investment function for many investors, especially new investors. It is not easy to decide on an initial asset allocation and even more complicated to maintain this allocation. This forces you to do an occasional rebalance, which could be tricky if you do it manually. This will help you if you go with a broker who offers advice on asset allocation and if the service incurs additional fees.