When you begin investing in the stock market, it is important to choose the right broker to handle your investment accounts. When comparing brokers, consider the capabilities of the brokerage company and compare this to the price of its service. Different brokers will be appropriate for people investing in different ways, so it is important to take all factors into consideration to make sure you choose the right broker.
Figure out what your objectives are for your investments. If you will only be investing a small amount of your income or will be investing infrequently, controlling your costs is important. If you are investing large sums of money or intend to use your investments as your main source of income, the ability of your broker to actively manage your account is more important than minimizing costs.
Consider discount brokers if you already know how you want to invest. Full-service brokers can offer financial advice and help you select investments that are in line with you objectives. However, if you already have a plan for how you want to invest your money, discount brokerage firms will allow you to make trades on your own at a much lower cost.
Choose whether you want to invest in only mainstream companies, or if you are interested in smaller companies. According to MSN, you will probably need a full-service broker to invest in many initial public offerings (IPOs) or companies that have low-market capitalization.
Compare brokers to one another using a reputable financial publication like Kiplinger’s to see ratings, fee structures and commissions for each broker. This information is vital to choosing the right broker.
Ensure the broker you choose is registered with the Securities Investor Protection Corporation (SIPC). The SIPC will help “protect assets held by a customer at a financially troubled brokerage firm.” While you should choose a reputable company that is unlikely to experience financial troubles, this extra insurance can still be beneficial in case of unexpected events.