Finding Discount Stockbrokers
Discount stockbrokers manage your stock trades at a reduced commission rate. These brokers can be individuals or brokerage firms, but their main function is to buy or sell stocks on your behalf. Discount brokers are best for people who want to save money on commissions because they are experienced investors who don’t need trading advice or people who trade infrequently. Whatever your reasons for wanting a discount stockbroker, finding a good broker is an important step to investing in stocks
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Instructions
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Decide what you want in a discount stockbroker. If saving on commissions is your top priority, then a good choice would be brokers who charge the lowest fees. If good customer service is important to you, then chose a broker that gets high marks in this area. In addition to offering low commissions, many brokers offer a variety of other services as well, such as research tools, training courses, real-time stock market quotes or investment advice. Some services are free, and some not. Some discount brokers allow you to also buy mutual funds or corporate or government bonds. Other brokers offer banking services. If you want any of these services, your goal is to find brokers that excel in these areas.
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Look for information on discount brokers. SmartMoney.com offers the most comprehensive list of discount brokers. In the annual survey you will find not only the best online brokers, but also the worst. Another useful source is J.D. Powers and Associates. It rates online investment firms in several categories based on a customer survey (see Resources below). Other sources of information about brokers are business magazine like "Forbes" and "Business Week," and newspapers like the "Wall Street Journal." Another option is to use search engines by typing in the relevant keywords.
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Narrow down your choices. Once you have checked out SmartMoney.com and others sites, make a list of a few brokers you want to research further. You can have as many brokers on this list as you need to make an informed decision.
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Research each broker on your shortlist. Visit the websites of each and poke around. Do you like what you see? Is the site easy to navigate? Look at the commission rates and the minimum deposit to open an account. Make certain the broker offers the services you want or need. If you like what you see, read all the information provided, especially the policies and terms of service. This legal information is of prime importance and needs to be read in its entirety, even if it is tedious. Your money and your financial future are at stake if you don’t know exactly what you are getting into. If you have a question that is not answered on the site, email or phone the company. Make certain you have all the information you need before making a final decision.
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Choose a broker and open an account. Once you have chosen a broker, fill out the application and submit it. After you have made the required deposit, you will be ready to start buying and selling stocks. But if for any reason you are unhappy with your broker, you have every right to close your account and find another broker using the steps above. Some investors have more than one broker. Whatever you decide, know that with so many discount brokers on the market that you will find the best broker for your needs.
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Tips & Warnings
Investing can be a risky business if you have not done your homework. Be certain that you have educated yourself before you start buying and selling stocks.
