It’s time. You’ve finally decided to start investing and buy your first stock. Unfortunately, you can’t just throw a few shares into your Amazon shopping cart, but you can set up an account quickly and easily with any number of online brokerages. What do you look for in a broker? We’ve boiled it down to the top three things anyone should look for in a brokerage website.
1. Commission and Fees, or the lack thereof
We’ve all heard of companies charging “hidden fees” and getting one over on their customers, but the reality is that most fees aren’t hidden at all. The most common ones to look for are there any commission on trades, transfer fees, closing fees if you decide to close your account, and annual fees for basic maintenance. Most brokerage sites will have at least one, if not all, of these fees as part of its cost. There are a few that don’t have any at all, and that may be the deciding factor between two brokerages. Warning: If you find a brokerage that isn’t willing to offer information about this upfront, find a different broker. You want an honest relationship with the business in charge of keeping your money safe.
2. Account Minimums
Almost every major online brokerage offers accounts without a minimum, but a few do. While you certainly need enough money to start making trades, many people don’t have the prerequisite $500 to throw into a new account. For many, this means saving up to have enough to cover these minimums, or opening an account that does not have any. Keep in mind that although you might start with enough, you also don’t want to drop below the minimum and encounter one of the fees we discussed above.
3. Your Trading Style
The third and final thing for you to consider when shopping for a brokerage is you! If you’re new to investing or don’t have a lot of time to spend researching stock picks, you might prefer an account with more of a helping hand, but if you plan on day trading to make investing a career, lower commissions might be worthless support from your brokerage. Consider your needs and goals, shop around, and choose the right brokerage site for you!
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