So, you’ve decided to explore the stock market and start making some investments, but you may be asking yourself: Do I really need a broker? Isn’t it enough that I just do the research and pick the stocks that feel right for me? Well, a broker can be the difference between investments that just sit there doing nothing before entering a slow but undeniable decline, and making some real money. They are the gatekeepers, and they’re also your security, offering you options you’d have never thought of and opening the door to many other avenues, as well as making sure that the options they’re presenting you with are the ones that actually work for you.
With all that being said, how do you go about finding the right broker? Well, here are a few questions to ask yourself, and some research that you need to do before you sign up with one.
What Do You Want?
Everyone’s got a very clear idea of what kind of return they want from their investments (as big as possible), but there are many different kinds of investors and what you need from a broker will depend hugely on which one you are. If you’re just dipping your toe into these waters for the first time, then you may want a broker who’s going to hold your hand through the whole process. If you’re looking to make a little money for your retirement nest egg, you want a broker who will find you the right low-risk investments for those kinds of moderate rewards. On the other hand, if you’re confident and ready to dive in head first, you want someone who’s going to point you towards the kind of options you want for your high-risk, high-yield portfolio.
What Are The Fees And Margins?
As friendly as your new broker may be, no one gets into investments out of the goodness of their heart, and there will be fees and commissions to check before you agree to work with them. These will vary from broker to broker, and it’s always worth doing your legwork to make sure that what sounds like an excellent deal actually is. Some brokers require a minimum investment, and most will make you pay a fee when you’re transferring funds, for example. However, with the current low-interest rates, some brokers are offering more enticing rates. You should check for the brokers with the lowest margin rates before making any decisions.
Do Your Safety Checks
As with literally everything you spend money on online, you want to make sure that you’re being responsible and you’ve done the legwork to ensure that you’re placing your trust in the hands of someone who deserves it. You’re going to want to make sure that they will protect your information, that they will reimburse you for losses from any fraud, and that the technology they’re using is secure enough that you feel comfortable. This is a big responsibility that they’re taking on your behalf and you need to be able to rely on them, so check on a site like BrokerCheck or see if they’re registered with SIPC for starters.
