How to Pick a Discount Broker

Discount brokers offer considerable reductions in the cost of buying and selling equities. Many advertise regularly on television but hundreds more exist. Service and cost remain important points in picking the right broker. Spend time researching the companies before opening an account, then pick the best one that suits your investment needs.

Instructions

Difficulty: Moderate

1. Make a list of potential discount brokers, then check out their websites for information. See the large list with overview and ratings at the broker-reviews website.
2. Know the type of account you need beforehand to see if the broker provides it. Standard, retirement, education and other specialty tailored accounts exist.
3. Compare commissions among the discount brokers for stock purchases and sales, mutual funds, ETF's, options and bonds. Some charge low commissions up to a set amount of shares bought or sold, others offer one price.
4. See what other fees exist and when the are applied. These fees can be for transferring and closing accounts, inactivity fees, IRA custodian and wire transfer fees, confirmation and monthly activity statements, minimum balance and annual fees.
5. Evaluate the initial deposit needed to open an account. Brokers vary from requiring no minimum up to several thousand dollars.
6. Check out additional benefits, such as phone and online trades, ATM service, check writing, local offices, research, margin and credit cards.
7. Examine customer service on the phone, ease and quickness of their website and ratings.

Tips & Warnings

• Keep a list of questions to ask each broker and make notes on their response and overall satisfaction with the call.
• Read and understand all requested material or application before picking a company.