Stock Market Basics: What To Look For When Choosing An Online Broker
You want to start investing, but don't know where to begin. There are many ways to invest: within a Roth IRA, Traditional IRA, 401k or an individual investment account, to name a few. With numerous online brokers out there like TradeKing, Fidelity, Charles Schwab, etc. how do you know which one is right for you? Each seems to offer its own special features that make it intriguing to investors.
Common things to consider when choosing a trading platform are price and history. When discussing price, this includes fees charged when you make a purchase or sale, in addition to the upfront deposit required. For example, Trade King charges less in fees than Fidelity on certain investitures, but requires a larger deposit. Are you willing to deposit more upfront to save down the road? Or are you more inclined to pay a little extra now in the hopes of securing more gains in the future?
Another item to give consideration to is your investment knowledge. Some platforms assume you are a seasoned veteran on the trading scene and offer very little information for you to absorb. The stronger platforms will not only provide corporate releases like quarterly reports, but will have some kind of research assistance; whether this be a blog, tools to view information or representatives that are willing to discuss ideas you have. These days this can be done online or over the telephone.
If you are in fact a seasoned veteran of trading you might want to consider platforms that offer the option to trade commodities, currencies, foreign markets, options, etc. There are platforms that offer this, but will charge an additional fee to use them. Then there are platforms that include this within your account.
If you are a beginner, consider the following when choosing a platform:
- Updated technology - the stronger the technology, the more helpful the powerful tools will be in assisting you in your investment strategies
- Fee structure may not mean what you think it does - just because a platform has the lowest fees doesn't necessarily mean it will provide the best service and the same goes for the highest fees
- Be able to research - you're not aware of everything you need to be as a beginner, so choosing a platform that provided extensive investment education opportunities is a good way to go
- Fees are taken out on both ends - if you make a purchase you will be charged the associated fee, but you also need to know that if you sell to acquire your profits you're going to be assessed a fee for selling as well
- Diversify - no matter what platform you choose be sure to diversify your portfolio so you don't have all your eggs in one basket
Be aware that having a strong investment platform to use doesn't mean you'll be any more or any less successful investing than any one else.