The internet has made life much easier for everyone.
People can pay their bills online, secure transactions, open up a bank account, buy groceries, shop for clothes or shoes, book appointments, consult a doctor, get a degree or order food.
In the same way, people can now invest in stocks, bonds, and funds.
The cost is low and it keeps on falling.
So, while everything is available at the click of the mouse, why should investment and brokerage services be any different?
To make things easier, this article will help you pick the best brokerage firm for yourself and explain the process of choosing.
To explain simply, a broker is a middleman or an agent who facilitates a trade.
When it comes to stock trading, a stock trader can be divided into two types, both providing different kinds of services at different prices:
This refers to the traditional type of brokerage firms, those who operate in a conventional way - through brick and mortar offices.
They may provide different services such as tax tips, retirement planning help and advice, and guidance on which investments to go for and which ones should be avoided.
Full-service brokers are the typical and conventional stockbrokers who will mail you a happy holiday card but this service, of course, comes at a high price tag.
As the name suggests, these are the brokers you find online.
Many investors do not want to use full-service brokers and may prefer to use the less expensive ones by paying less commission on each trade so that they can end up saving money rather than wasting their money on unnecessary frills.
One type of stockbroker is not necessarily right for everyone since every investor has their own preferences.
While a full-service broker may cost $500 as their commission for a $10,000 investment, a discount broker may charge only $5. This difference alone is enough for many people to opt for a discount brokerage firm.
As you near retirement, you may want to opt for a full-service brokerage firm that can handle all of your financial complexities for you.
Therefore, for many people, at this stage of their life, they may think it’s alright to pay a hefty commission each year for advice and access to a professional who can help them with their financials as they start to make withdrawals instead of contributions to their retirement accounts.
However, things have changed, and nowadays, even the discount brokers are getting involved in advisory services, so they shouldn’t be ruled out completely.
The presence of online brokers makes life easier and much more straightforward by placing trade online and buying stocks.
Once you have a brokerage account, all you require is the stock ticker's symbol and you can place a trade.
This is the order that is placed at the prevailing market price immediately.
This means, if you decide to place an order for 10 shares of Amazon, the trade will be filled by another person who is selling 10 shares of Amazon but not at a known price.
This is filled quickly and you can end up paying a little premium for each share bought.
This is different from the market order in that the trade takes place at a particular price.
For example, if you decide to buy 10 shares of Amazon at $70 each, the order will only be completed if there is anyone selling the shares for $70 per share.
Limit orders are usually suitable for new investors or beginners as it allows them to pick a specific price at which their order is to be filled.
When it comes to a market order, it is more important that your order gets filled in, rather than at what price it gets filled in.
The most reputed and well trusted online brokers, reviewed for their services, reliability, fee structures, and others, are listed below:
Choosing the best online stock broker is not an easy task, especially when there are so many options.
It is important that you should consider a few factors that include commission, fees, analysis tools, the minimum amount required to open an account and the like.
You should not go for an online broker simply because they are cheap or affordable, but they should be reliable as well, depending on their reviews and reputation.