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Do I Need To Use A Stock Broker?

May 12, 2008
If you're planning to invest in the stock market then you will need to understand the fundamentals of stock market investing first. One of the key things you need to know is that you will need to use a stock broker no matter what your knowledge of the market is. The stock broker can be a single person you hire or it can be done online through a firm like E*Trade. There are two huge two differences between the two and the online option has only become popular in recent years.

Twenty years ago when people would invest their money they would simply give their money to a stock broker and they would in turn invest in keeping some of the money. There use to also be many fees that were charged for these services and the broker made money off every deal even if you lost money.

Now that the competition is more fierce most of the fees are no longer in place, although you may run into some unexpected fees with your broker or firm it's rarer of an occurrence. Costs of investing have lowered dramatically since the introduction of the stock market and stock brokers and it's more affordable then ever. You can even invest online now using a stock broker firm and all you pay for is simply the transaction fees. You're completely in control of your portfolio and investments, so if you plan on going this route make sure you have lots of experience and understand what you're doing.

If you're new to the stock market and investing in stocks then you should hire a local stock broker to handle your investments and questions. This is ideal for the first few years so that you can build a solid portfolio with the help of a broker. This method will cost a lot more then handling your own investments through an online firm but if you don't know what you're doing then this is the best option.

After you gain experience you should move your portfolio to an online firm like E*Trade and start choosing your own stocks to invest in. This is a lot cheaper and you'll make more money by doing the work yourself, so once you're capable of handling it you should.

So whether you choose a stock broker who you can meet in person to answer questions and help handle your portfolio or you decide to use a stock broker firm that can handle your transactions for you, you always need to use a middleman to buy you're the stocks. There isn't anyway around this and every single person who invests with stocks goes through either a stock broker or firm who is licensed to purchase stocks for you. Both are suitable for different people and depending upon your knowledge of the stock market will determine your decision of choosing a stock broker or firm. One is ideal for getting help whereas the other form is ideal for doing the work and investing yourself without help for the company.
About the Author
Scott Jack offers lots of great financial articles on Credit Crunch. For more specific articles visit Credit Card Tips and Insurance Tips .
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