What Kind of Trades Do You Want to Execute?
Are you the type of investor who knows exactly what they want to do and requires a platform that allows them to execute transactions quickly and easily, or do you want a broker with a more extensive range of tools to assist you to uncover opportunities? For example, what types of securities are you interested in? Stocks, mutual funds, or exchange-traded funds? Do you wish to trade options, futures, and fixed-income instruments if you’re more advanced? What about margin trading? Do you require conditional orders, after-hours trading, or automated trading options?
What Kind of Help Do You Want?
Do you want to do it yourself and learn how to understand charts and financial data to locate and execute your trades, or do you want to hire a professional? Where are you on the learning curve if you’re going to do it yourself? What kind of resources will you require to expand your knowledge? For example, will you require easy access to support persons or learn everything you need to know using online educational resources? Are you willing to execute trades online, or will you prefer to call in and have a broker assist you?
What Are Your Investing Goals?
Why are you deciding to invest? Are you looking for a way to augment your regular income to better your current standard of living? Do you have a specific event or expense in mind that you’d like to fund? Do you intend to make this your principal source of income in the future? Are you trying to save for retirement? If yes, do you currently have a retirement account, or will you start one with your selected brokerage?
These questions have no wrong answers. Be honest with yourself about how much time, energy, and effort you’re willing and able to invest. It’s okay if your answers alter over time. Don’t try to plan out all of your wants and aspirations for the remainder of your life. Begin with where you are right now.
Step 2: Narrow the Field
Now that you know your financial objectives and what essential services you’ll search for in your ideal brokerage, it’s time to narrow down your selections. While some brokerage products are more significant to some investors than others, there are a few things that any legitimate online brokerage should have. With so many options available, focusing on these fundamental criteria is a beautiful way to restrict the field quickly.
Step 3: Figure Out the Fees
While other factors may be more important to you than fees, you should have a good sense of how much you’ll pay to use any specific brokerage.
A minor premium may be justified because some platforms provide capabilities that their less expensive competitors do not. But, in general, you want to lose as little as possible of your investment returns to accounting fees and trading commissions.
