There are investors who want others to manage their portfolios, while there are some who want the opposite. Investors who are on the search for do-it-yourself tools have to keep in mind that all online brokers won’t offer the same things, but since there are a variety of brokers throwing different things at you, it can be difficult to narrow the choices down.
Knowing What You Need
Choosing an online broker depends on what your needs are. Generally, when looking for an online broker, most people’s needs have a lot to do with four factors that can either make or break the selection experience. The four factors are:
1. Personal Needs
It’s obvious you shouldn’t go for a broker if its offering the opposite of what your investment needs are. You want to aim for a broker who is going to match your strategy. Depending on the type of trader you are, you want to ask yourself specific questions to narrow down your search. Is the broker going to offer tools that are necessary for your advancement? Are you wanting to retire or build a better future? For example, if you’re buying and holding, it wouldn’t make sense for you to go with a broker who is focused on finding shares whose values are based on an underlying investment.
2. Services
What kinds of services does the broker offer? It’s important to make sure there are resources available to you at all times, just in case you run across any obstacles on your investment journey. A good online broker will still have advisory services and research tools that are easily accessible to you. Banking services should be a must.
3. Commissions
The commissions area is an area where it's easy to get stumped. Some brokers will give you permission to individual stock options, mutual funds, bonds, etc. Depending on the investments you’ll adhere to, there are generally a couple things you may want to pay close attention to:
1. Will your investment needs be catered to?
2. The pricing of commissions.
Some brokerages will have per-sharing costs and others a pay-per trade commission. While others charge a fee to purchase a fund. For example, investing in a mutual fund charges a purchase fee, but it's important to find brokers who have no transaction fees for mutual funds.
4. Fees
No matter what, when you’re investing, it's inevitable that it won't be completely fee-free. However, it's possible to minimize how much you’re spending on them. It’s essential to be aware of minimums in regards to accounts. The best advice to give you here, is to find brokers who have no account minimums, but if you’re okay with a minimum investment, just remember that opening an account with a smaller portion of money is easy, but improving the investments within that account could be the challenging part.
Final Thoughts
Many investors have trusted the resources of online brokers because of their investment tools and do-it-yourself nature, and we think you’ll love them as well. Finding an online broker is really all about narrowing down what your needs are now and will be in the future.
