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Learn Stock Market Trading Tips
How
To Find the Right Stock Broker
All investors have one thing in common. Whether
they trade in penny stocks or are long-term value stock investors,
they all have to work through brokers. When entering the world
of the stock market for the first time, choosing a
broker is your initial step and potentially the most important decision
you will make. There are many choices in brokers and it is
important to understand the key differences in each in order
to better make your decision.
Traditionally, full-service
brokers were the only type available.
They charged high commission fees but also offered a lot of
advice and guidance in choosing investments. In 1975, all of
that changed and the discount brokers became the reigning champs
of the investing world. In the last ten years, the internet
has allowed individual investors to research and investigate
potential stocks themselves, and even buy and sell stock. There
have been advantages to the advent of the discount broker and
online brokerage firm, but for some investors it has led to
more mistakes in less time. The key is doing the research and
investing wisely.
On one end of the spectrum are the discount
and online brokers.
These brokerage firms act as order takers for their investors.
The investor places an order on the phone or online. The only
helped offered is with the technical aspects of the website
or the ordering process. There is no guidance for what stocks
to buy, when to buy or when to sell. Many online brokerage
firms offer their members access to stock market research,
but this is provided by a third party. The account management
tools help you understand how much you have invested and where
it is going. These tools are normally online or downloadable.
The discount and online brokers are perfect for people either
already familiar with the stock market, or those who do not
have much money to invest. They do require that the investor
spend time researching and planning investments. If you are
interested in research or want to avoid hefty brokerage fees
than discount and online brokers may be for you.
The next step in service is a discount or online brokerage
with an assistance broker. The assistance broker will offer
a marginal amount of help. In online brokerage firms, the assistant
broker takes the form of more research available and newsletters
with investing tips. There is still a degree of research that
needs to be done by the individual investor, but these brokerages
at least point their clients in the right direction.
The
traditional full service broker provides recommendations
for specific stocks that would be good for your portfolio. The broker analyzes your financial situation to determine your
needs. They put together an investing plan that is reviewed
periodically and adjusted as needed. Full service brokers are
an excellent choice for those who don’t have the time or the
interest in staying on top of the latest financial news. The
full service broker does all the research for you and presents
you with the best investments for your situation. Their clients
are handled with attention to personal details and goals. This
attention does come with hefty commission fees, but considering
the amount of work and dedication that full service brokers
provide these fees are understandable. Traditional full-service
brokers make money based on the amount of transactions they
facilitate.
A
money manager is one step up from a full-service broker
in their level of financial services. Money managers (also
called financial advisors) will work with clients to improve
their entire financial picture, which may or may not include
investing in stocks. Money managers hold stocks and bonds for
clients. Each one has his or her own unique style and so it
is important that you choose wisely to make sure your money
manager has the same financial philosophy that you do. The
money manager will give you personalized service, an individualized
portfolio and ongoing management of your finances. Money managers
charge flat fees based on services rather than on transactions.
A professional money manager does not receive commissions on
transactions. They are paid from a percentage of the assets
under their management. In that way, they are working for you
and themselves at the same time. If your portfolio grows, their
commission grows as well. # # # # # SolveYourProblem.com : 2007
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