How to Select An Online Broker

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How to Select An Online Broker

Get a time machine and go back 10 or 20 years and you will be taken aback by the fact that the Stock Market was considered as a no-go zone by common people those days. It is the internet that broke down all the barriers and now we can see every Tom, Dick and Harry giving random advices on how to invest on certain stocks to some unsuspecting commoners. Don’t trust these self-proclaimed ‘financial experts’ unless you don’t mind losing a significant percent of your hard earned money. You need to find an online broker who knows the stock market inside out.

Now the problem is that they are way too many people proclaiming themselves as ‘the most trusted online broker’. You simply can’t trust a guy on the face value and end up meeting a financial disaster. This is the reason why you need to look at the below factors before selecting an online broker to manage your investment portfolio –

Check the Background

Will you buy the stocks of a company that you know nothing about? Of course, you would not. People do extensive research about a company before buying stock of that company. The same principal is applicable for online brokers. Contact the existing and former clients of that online broker and try to gather as much information as possible before coming to a conclusion.

Minimum Deposit

Be sure to ask them how much you need to invest to get started. Always be wary of high minimum balance because in that case, the impact would be very strong on your financial strength. Go for a small amount and wait few days or weeks to just see how good that guy is with numbers and stock market intricacies. High minimum balance might be okay for big investment firms but for small business owners like you that would be a pure gamble.

Availability

Will that online broker be available in case you run into some problem? There are some online brokers who rarely communicate with the investors. They just take your money and contact you once they feel ‘you need to invest more money on certain stocks’. So before you select an online broker, you need to make sure that he picks up phone or at least is available via email otherwise there is no use of hiring that guy to deal with your investment.

Interest on Brokerage Money

You are supposed to keep a certain amount on the brokerage account. Though most brokerage firms offer 3 to 4 percent interest rate on it, there are some who don’t pay a single penny. So, you need to ask the online broker about it.

Lowest Pricing Is Not Always The Best Choice

Just because an online broker is asking the lowest commission cost, you should not trust him to make important investment decisions on your behalf. You would probably never like the idea of entrusting a rookie to make crucial investment decisions. That is why you need to look beyond the low pricing trap. You need to meet the broker in person before making the final decision.

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