How to Choose a Brokerage Account

A brokerage account is used to trade in stocks.

A brokerage account is a type of account that enables you to trade in stocks, bonds, mutual funds and other investments at a commission. When choosing a brokerage account, various factors are considered. These factors help to establish how well a prospective brokerage account meets the desired investment style of an individual or organization. They also help in identifying a brokerage firm that best meets desired trading practices.

Instructions

1. Get information brochures from different brokerage firms. You can get them by visiting their offices, or you can download the information online if the brokerage firms have websites with an information download option.

2. Compare the account opening requirements by different brokerage firms as outlined in the information brochures. Some may require you to pay an account opening fee, while others will not. Choose the account without an account opening fee if it meets your other requirements.

3. Compare the brokerage commission fees from the information contained in the brochures, as the fees vary from broker to broker. Choose the broker with the lowest fees if it also has good service. This will save you a lot of money when you start trading.

4. Compare the requirements for trading amounts by the different brokers. Some brokers may require you to trade with a minimum of $2,000 dollars, while others will allow you to trade with $200. Choose a brokerage firm that allows a smaller minimum trading amount if you are not starting off with a lot of money. Choose one with a higher minimum requirement if you can afford it and you feel the brokerage firm offers other advantages.

5. Compare the level of financial advice offered by different brokerage firms. Some firms will assign an officer to guide you through the investment process, while others will let you make the decisions on your own. Choose a brokerage firm with a good financial advisory service, as this will help you make sound investment decisions.

References

• Financial Web: Choosing a Brokerage Account for Your Investing Style
• NASDAQ: 10 Things to Consider Before Selecting an Online Broker