You do not need a broker-you can use an online broker:
Believe it or not, these days the trend is that you do not need some expensive suit telling you how to invest your money, you can figure that out on your own. The problem is that expensive suit comes with the ability to make your transactions, and most of us do not know how to do that on our own. Welcome online brokers.
Who needs a full-service guy when you can call up Suretrade or Datek or any other online broker and make your transaction yourself for less than $10 a trade?
Why not go online?
Well, some online brokers are not even worth that $10, so while many full service brokers do not deliver the kind of value you’re paying them for, they may still be a good option. Good broker do exist, and can offer invaluable counsel, especially if you lack the experience, time or interest to do your own research. Online brokers are generally just a facilitator, you do not get the advice, research and hand holding you get otherwise. And instead you might get servers that are down, long phone wait times, and lost mail. So, the question is not so much should I use an online broker, as it is how to choose an online broker that will get the job done.
Many investors can make a lot more decisions on their own, but there are those that cannot, so before you choose an online broker, determine if you need that, or a full service broker.
But, if you have a firm idea about a stock you want, why not get it as cheaply as you can? So, the following are things you can do to choose an online broker, and get the stock you want for the best price possible.
- Ask Questions: When you are trying to choose an online broker, the smartest thing to do is ask a lot of questions. You won’t know unless you ask. So, ask yourself, or a representative, how long the company has been in business, whether or not they have a full service brokerage as well, what kinds of fees they charge, whether or not they are legitimate, whether a real person will be available to help you, what kind of advice or tips they offer, why should you choose them. If you ask these questions you are more likely to find a reliable, good online broker to help you with your offerings, trades, purchases, etc.
- Determine the Level of service you want: Some online brokerage services are only there to buy, sell, or trade, they offer no advice, tips, or suggestions. Some allow you to input a relatively small amount of information, and they take care of everything for you, others act only as a platform, but you must do the grunt labor. So, when choosing an online broker you will want to consider how much work you are willing to do, and how much service you want or need. If you are a long time veteran of the stock market then you may not need anything other than a platform to buy, sell, and trade from. However, if you are a newbie, it may be wise to choose an online broker that offers advice and help.
- Look at history and reputation: While trading online can be cheap, it can also turn into a huge problem for you, so make sure you find a company that has a history of great customer service. If the broker has a reputation for checks getting lost in the mail, servers being down, and orders going unfilled, it won’t matter how cheap they are, they will not be worth it, so be sure to check them out. If a company is well known and trusted by many, and used by many, chances are that even though they are an online broker, they will provide you with the level of customer service you want, and they will be worth your time.
- Evaluate Budget: Even some online brokers are a little pricey as they are more like discount brokers. So, decide what your budget can handle and go from there. There is no sense taking the time to look into a company you simply can’t afford to hire.
- Find Specialists: If you are interested in mutual funds, find an online broker that deals solely with those. If you find an online broker that is specific, you are likely to get better results
- Know if you want discount, or online: Some online brokers, are actually discount brokers– companies like Charles Schwab, Waterhouse Securities and Jack White. An online broker purely takes orders, and places them, these have added some advisory and account management services. With these additions comes an addition to the price. So, before hiring these guys to do the same thing a pure online broker would do, determine if you want those added services, or if you are wasting your money using them.