Finding the right broker can be an arduous task. A good broker can help you build wealth and answer your questions about investing accurately and honestly. A bad broker can leave you in a worse financial position than when you began. In order to find the best broker for your needs, you will need to do some research and ask the right questions before deciding on who to choose. Here are some questions you should ask before deciding on a broker.
What Tools Are Available For Research Or Education?
It is important to be able to educate yourself about the investments you are considering before you spend any money. Research tools and education materials provided by the brokerage can help you pick the right investments for your current financial need and risk tolerance. Online brokers often offer trading software and other tools that include real time data to assist investors in making decisions on which investments to choose. In some cases, the brokers that offer these services charge more, so review multiple options to ensure you are getting the best price for the services offered.
What Is The Commission Rate?
Brokers make their money by charging a commission on the trades or purchases you make through the brokerage. The commission rate that you will be paying will eat into any profits you make on your investments, so it is important to ensure you are paying a competitive rate. Some people end up paying commission rates as high as $10 per trade, but it is possible to pay a rate as $2.50 per trade at a discount broker, like Just2Trade. You may also be able to find a broker that offers a certain number or type of trades for free during a predetermined time period, usually a month.
What Is The Account Minimum?
Many brokerages have a mandatory minimum amount that they must keep on account with the brokerage to ensure that they are not charged additional fees as a penalty. Different types of brokers have different account minimums based on the expected investment amount of their target market. Discount brokers will generally have lower account minimums than brokers that cater to investors that invest much higher amounts. Make sure that the minimum brokerage account balance is an amount that you can meet and maintain for a significant period of time without financial hardship.
What Other Fees Are Charged?
In addition to the commission fee, there are a number of other fees that may be charged by the brokerage. These fees include annual account fees, inactivity fees, document fees, and account maintenance fees. Some of these fees are charged to every investor that invests with the brokerage while some others are triggered by specific events. Make sure to ask about all the fees that are charged and their amounts before making your decision.