Why an online broker (over a real, live money manager)? For the right investor, there may be dozens of advantages to using an online broker instead of a personal broker or financial advisor. One of the most distinct advantages to using an online broker is that you are in control of your own portfolio; an advantage that truly shouldn’t be overlooked. The more research, time, and knowledge you have invested in your own portfolio, the better off you’ll be. Nobody will look after your money better than you. It’s also a possibility that you’ll pay a lot more in fees through a financial advisor (though research is certainly necessary in any situation). Ultimately, however, it’s important to remember that a stock broker/financial advisor is in the business of making money for themselves. Yes, they might be watching out for you, but they’re ultimately watching out for Numero Uno. Another reason an online broker just might be your ticket to wealth is that most advisors have their clients’ money knee-deep in mutual funds. You just have to do a simple Google search: “average mutual fund expense ratio” or “mutual fund commissions” to know that these percentages are high. Often way too high, compared to, for example, low-fee, low-expense index funds. (Now, it’s true that you can invest in mutual funds through an online broker as well, but chances are that your commissions or expense ratios will be lower.) What are your goals? Why are you investing? Without goals, how do you know what your plan is and what type of investment to dive into? Different brokers offer different products, and your ultimate goals should end up guiding the products you choose in the end. What do you want your money to do for you? Do you want to build up a secure retirement? Save some money for a vacation to Japan? Save money for your kids’ college education? Make sure you have enough for an addition for your home? All of the above? Write down your goals, because those will be what fuels your drive and inner fire. And if you do have some money socked away for something really fun, like for real, a trip to Japan, boy, won’t it be exciting to watch that grow? Rewarding yourself with something tangible at the end of all that hard work is so incredibly, incredibly amazing. It also makes you want to invest more, and more, and more, because finally, you can see what all the fuss is about. What to look for in a broker Research Trading tools Asset classes Fees Banking services Positive customer reviews There are a number of factors to consider when choosing your first broker. Consider what type of trading you will be doing. Day traders will be looking for different tools and information than long-term retirement investors will be. Some traders will be looking for research to provide trading ideas for them, while others will be using the platform just to execute trades. Consider commissions and fees and how they may impact your overall returns. Look for potentially hidden or unexpected fees in particular. Consider whether or not you will need banking or advisory services. Some brokers offer these services, and others do not. Finally, read reviews by other customers and look for patterns of complaints about customer service or any other problems with the service.
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