No matter what you want to invest in, you will probably need to work with a broker. When getting into the stock market for the first time, picking a broker is the first step and could be the most important choice you make. For example, how much of your investment you can lose before your broker closes your account depends on which broker you choose.
- Brokers who do it all
A full-service broker is a full-fledged business with its own team of market analysts. Their knowledge of the market is so much better than yours that it can really help you make the right trade. All of that changed in 1975, when discount brokers took over as the best way to invest. In the last ten years, the Internet has made it possible for individual investors to do their own research on stocks and even buy and sell them. There are some good things about discount brokers and online brokerage firms, but some investors have made more mistakes in less time because of them. The key is to do your research and make smart investments.
- Discount And Online Brokers
The discount and online brokers are at one end of the range. These brokerage firms do what their investors ask them to do: they take orders. The investor either calls or goes online to place an order. Help is only given with technical parts of the website or with the ordering process. There is no advice about which stocks to buy, when to buy or sell, or how much to pay for them. Many online brokerage firms let their clients do research on the stock market, but this is done by a third party. The tools for managing your account help you figure out how much you've put in and where it's going. Most of these tools can be found online or can be downloaded. People who know how the stock market works and don't have a lot of money to invest will do well with discount and online brokers. They do require time spent researching and planning investments on the part of the investor. Discount and online brokers might be for you if you like to do research or want to avoid paying high brokerage fees.
- The Help Broker
The next level of service is an online or discount brokerage with a help broker. The help broker will offer just a little bit of help. In online brokerage firms, the assistant broker is more research and newsletters with tips on investing. Individual investors still have to do some research on their own, but these brokerages at least point their clients in the right direction.
- Full Service Brokers
The traditional full-service broker tells you which stocks would be good for your portfolio and why. The broker looks at your finances to figure out what you need. They made a plan for investing that is looked at regularly and changed as needed. People who don't have the time or interest to keep up with the latest financial news should use full-service brokers. The full-service broker does all the research for you and shows you the best investments for your situation. Their clients' needs and goals are taken into account when they work with them. This kind of care does come with high commission fees, but when you think about how much work and time full-service brokers put in, these fees make sense. Traditional full-service brokers make money by helping people buy and sell things.
- Those who run money
It's smart to pay someone else to handle your money. Money managers, who are also known as financial advisors, help their clients improve their whole financial situation, which may or may not include buying stocks. Stocks and bonds are held by money managers for their clients. Each has his or her own style, so it's important to choose carefully to make sure that your money manager has the same ideas about money as you do. A professional money manager doesn't make money from commissions. Most of the time, these brokers work on commission, so they have a strong incentive to make sure you make a lot of money from your investment.
