Technology has made it easier to access several places, even brokerage services, but as with traditional brokers you have to be careful with the online brokers that you choose to trust with your investments. These are a few considerations in choosing an online broker:
- Find out what kind of account you want. You will likely be made to choose from full-service, discount and premium brokerages; and the features for each type will be different depending on the company that handles them. A discount brokerage service would be different from what you can get from a finance broker, share broker, dealer broker, and direct broker, and it’s good to check these individually with the firms which offer them if you want a complete survey of the advantages and disadvantages of each one. You can check on a site like Gomez.com for a comparison of online brokers to help you decide which ones seem to be the best.
- Visit the websites of the brokers in which you are interested. When you visit their site, look up information on the fees and commissions they charge for transactions, the services they offer, their policies on terminating accounts, etc. You can also check for testimonials and reviews, as well as complaints and other problems that have been noted by other people concerning the brokerage. If there are many reported time lags, you might want to reconsider choosing that broker since time lags can cost you a good transaction. Needless to say, you should also choose a broker that is reported to be secure.
- Decide what type of service you expect from your broker. Online brokers conduct business differently from each other, and it’s up to you to choose which one has the features that are most convenient for you. Some brokers offer different modes of payment, from sending checks to wiring money. Others offer on-site research tools and real-time online service to go with the ease of online trading, plus the option to ask for telephone assistance. Telephone service can be particularly helpful especially for beginners, but before choosing a broker which offers telephone service, call their 800 number to check how long you’ll be made to wait. Time is everything when making investments, so a long wait time to get someone to assist you can only reflect what kind of service you’re likely to get from that broker.
- Check the requirements set by the broker. Inform yourself of the fine details about the type of account that you can open with a broker and what you can get from it. Some brokers have a set minimum amount that you can put into your account, which can vary from a few hundred dollars to $100,000 or more. While there are brokers who will allow you to apply completely online, there are some who would also probably ask you for some paperwork and your signature for added security.
Also remember that investing is taking a risk, so make sure that you invest only up to the level of risk that you can actually afford. Cashing out an investment can be hard or even impossible to do in some circumstances, so it would also be good to have liquid savings set against a possible emergency in the future.