Selecting a stock broker needs a vigilant consideration. If you’ve never made an investment in the stock market before and you are looking for a good stock broker then first of all, you must understand what type of services you wish to avail? Before you choose, it is necessary that you know who is a stockbroker. A stockbroker is an individual who serves as an intermediary between you and the stock market. He is certified and trained to take part in the transactions of the securities market on behalf of his clients. He acts as a principal as well as an agent. He buys and sells securities on behalf of his clients and in turn receives a commission for his services. Since an efficient management of finance, calls for a lot of skill, experience, and management, it is better to go for a stock broker, as they can manage your funds efficiently. He provides valuable assistance in taking proper and profitable investment decisions.
Why Do You Need a Stock Broker?
It is very difficult for a beginner to comprehend as to how one can invest in a stock market. Many beginners will find it very scary as it is filled with all sorts of new terms, new meanings, and all kinds of bewildering contradictions. Because of this reason, it is better to work with a professional financial adviser or a stockbroker whilst you are learning about the world of investing in the stock market. A broker can assist you to learn the terminology, and also aid you to make financially sound and informed decisions that will be in conformity to your financial status and your financial objectives.
How Can You Choose a Stock Broker?
- Know your needs: Before you go to a broker, first ensure that you are aware as to what kind of services you are actually looking for. Make sure what sort of investments you are keen to make. Also, ascertain the upper limit of the sum to be invested. This insight will facilitate you in narrowing down your search for a good stock broker.
- Select the right kind of broker: There are basically 2 types of brokers – a full-service broker and a discount broker. A discount broker is the one who simply carries out your market orders, with more or less no advice at all. On the other hand, a full-service broker provides you with a comprehensive advice and single handedly takes care of your investments. He offers you research support. The only difference between the two is the commission they charge.
- Fix the commission: The next thing you are required to determine is the type of broker on the basis of the quantum of money you are willing to expend. If you are a new trader, then there are chances that your budget is not unlimited. Some brokers have a complicated fee structure whereas others may look too good to be true. Thus, consider all these factors before deciding what’s best for you.Most of the brokerage firms charge ongoing fees in relation to the maintenance of your account. Make sure that you completely understand the fees structure and how they will be charged to your account.
- Know your requirements:Determine the investment needs and goals such as short term profits, growth, tax savings and stable income. You need to check as to whether he has the potential to plug the experience and skill gaps you have, with appropriate guidance.Do not take a hasty decision regarding a brokerage firm or a stock broker based only on a telephone advertisement or solicitation. Your new account form should clearly reflect your investment goals. If there is a change in your goals, then corresponding changes should be made in your as well as broker’s records.
- Shortlist the brokers: Meet at least a few brokers before choosing one. In this manner, you are more open to different types of brokers and their different behaviors .If you intend to go for a full-service broker, then first make sure that the stock broker is associated with a respectable broking house. Check whether he is registered or not. Check the stock broker’s history. Discount brokers are the most ideal for beginners and new investors.
- Ascertain your risk tolerance: your account form requires you to specify the degree of risk you are ready to undertake. Remember, higher risk yields higher returns.
- Check references from some clients: Check with your colleagues, or friends and others if they can give any references. Get in touch with their stock brokers, this will provide you with a sense of security if you are intending to associate with these brokers. You may also check their complaints on various websites related to consumer forum or the regulator SEBI.
- Platforms Available: Now most of brokers provide online trading however still very few of them provide a robust mobile platform. Few of them offers Android based applications which may be used on your mobile phone. Not only it makes tracking markets a lot easier but also let you trade without any delay. The chances of missing a movement in the market or trade of your choice is very low with handy access.
Hence, choosing a stock broker is not an easy task but once an appropriate broker is selected it is he, who is responsible for determining the future of your investments.
