How To Choose an Online Broker
|
|
You are reading this because you are interesting in investing. Congratulations on taking the first step toward investing. Choosing a broker does not have to be a tough decision to make. You simply have to think about your objectives and the right broker will pop into your head. It's that easy.
Know how much you'll invest.
To aid you in choosing the right broker, you must first know how much you plan on investing. Will you be investing $500, $1,000, $5000, or $50,000? You must know this because some brokers require a minimum initial deposit. Some require a minimum of $2,000. Others require a minimum of $500. And some don't have a minimum, or simply accept a smaller amount to open up an IRA. Your very first step is to decide how much of your money you will plan on investing.
What will you invest in?
What do you plan on investing in? Do you plan on buying stocks? You also have a choice in purchasing mutual funds, options, bonds or even certificates of deposits (CDs). All online brokers are built differently. They won't all offer all these options. You have to make sure that the broker you choose has what you want to buy. The last thing you would want is to end up with a broker that only offers bonds when you rigorously plan on investing in stocks.
Compare fees and services.
Before you choose a broker, find out what they charge in commissions and fees. Each broker sets their own fees and the difference can be quite substantial. Make sure that you know the commission fees for Market orders and Limit orders. On top of commission fees, also compare the maintenance and transfer fees.
Don't just compare by how much the brokers charge. You should also check out if they have a lot more to offer. Find out if they have phone trades. Does the broker's site have a place where you can do research on your investments? What about local offices? Do they offer the peace and comfort of actually sitting down and talking with a real person?
Comparison of Online Brokers
Do the paper work and fund your account.
Once you have reviewed the different brokers, it is time to fill out the paper work and fund your account. Almost all of the online brokers allow you to sign up electronically and also fund your account electronically. By signing up online and funding your account electronically, you significantly reduce the amount of time before you are allowed to trade. If time is of no importance or you are afraid of doing online checks, you can simple print out the paper work and mail it along with your check. If you already had a brokerage account, you can simply transfer your funds from the old broker to the new.
Choosing a broker does not have to be a cumbersome task. It's really as easy as 1-2-3. Simply know how much you want to invest, know where you will invest, compare fees, and submit the paper work. It's that easy. Now that everything is set up, it's time for you to start investing. Good luck.
Posted by jonathan on January 25, 2006 at 03:51 PM