3 Things to Consider when Choosing an Online Stock Broker
So you are interested in handling your own investments? This has become extremely common in today’s day and age. Simply put, a lot of people do not trust others to invest and manage their money. If this sounds familiar, you need to put time and effort into choosing the online brokerage that is best for you. Any mistake could lead to unnecessary financial stress and expenses.
While there are many points to consider, these are often the three most important factors to keep in mind when choosing an online brokerage.
1. Fees, Fees, and More Fees
You get what you pay for, right? While you may be tempted to choose the brokerage that offers the lowest commission cost, this is not always the best way to make a decision.
From free trades to those that cost $30 or more, you are going to find a variety of cost structures. However, as you dig deeper you will find that these numbers can and will change based on a variety of factors, including volume and specific types of services, such as limit orders and options. Make sure you understand how you’ll be charged for the trades you want to place.
2. Is There a Minimum Deposit?
Some people have a lot of money to invest. Other people only have a few dollars here and there. Unfortunately, many online brokerage firms require a large initial minimum deposit. Do not be surprised if you come across companies that require as much as $10,000 to get started.
But before you begin your search, write down the number you want to start investing with. With this by your side, you can begin to cross off brokerages that require a larger minimum deposit.
3. Customer Service
If you are new to investing or simply new to investing through an online brokerage, you are going to have questions. Some of the most common include:
- How do I complete a transaction?
- What is my fee structure?
- How can I check my account balance?
As you can imagine, these are just three of the more common questions that beginning investors ask.
If you don’t choose a brokerage that offers excellent customer service, make sure to choose one with a solid FAQ that clearly addresses these and other common questions. There is nothing worse than waiting on hold for 30 minutes or sending an email to support, just to find that you don’t receive an answer for a couple of days.
Before you open an account, call the company and also attempt to contact them online. Are you getting a quick, friendly, and accurate response?
It can be a lot of fun to open an online brokerage account. That being said, your fun can turn sour soon enough if you begin to invest with a firm that does not have your best interests in mind.
If nothing else, make sure you understand the following points: fee structure, minimum deposit, and customer service.
When you focus on these details, you will find yourself in position to make an informed and confident decision on which is the best online brokerage for you.