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How to Select the Best Online Stock Broker

Jun 27, 2008
Selecting an online stock broker is a very important task. Your online broker will execute your investment trades, store your personal information, maintain your balances, etc. With all the different online brokers competing for your business, you need to compare multiple brokers in order to choose the right one.

Here are a few factors to consider:

Conduct Research: Find out as much information as possible about the broker. Ask your friends who they bank with or conduct a simple Google search to find reviews and comparisons about online stock brokers.

Discount vs. Full Service: It is better to start with a full-service broker for novice investors who wish to develop confidence and knowledge of the markets. As you get familiar with the process, use a discount broker to cut costs and invest independently.

Minimum Deposit Amount: Find out the minimum deposit the firm requires for opening an account. Some firms have high minimum balances, as much as $2,000 to start. Some discount brokers have no minimum deposit at all. A good broker will allow you to open an account with very little money and keep it open as long as you like.

Trading Fees: Price doesn't always equal quality. Don't open an account with the broker just because it offers the lowest commission around. You also have to assess whether the broker offers a wide range of trades, broker assisted trades, stock options, ETFs, margin accounts, etc. Again, do lots of research to figure out all the features you need in a broker.

Product selection: When choosing a broker, most people think about buying stocks. Remember: there are tons of investment vehicles available to investors because of technological advancements and the internet. This includes CDs, municipal bonds, ETFs, futures, options, funds, and commodities. Many brokers offer add-on services, such as checking accounts, money market funds, and credit cards.

Site performance: A reliable broker provides 100% site uptime. Make sure your broker's site loads fast and doesn't lag during trading hours.

Customer service: Customer service is crucial to your investment success. Test the broker's customer service before opening an account. Call the company's service center and ask some questions and take notice of the waiting period. Most brokers answer their customer's calls fairly quickly, but you should double check anyway.

Ultimately, choosing the right online stock broker takes a bit of research and digging, but anyone can find the perfect broker within a couple hours. Weigh all the broker's features and benefits before opening an account. By then, you will gather enough information to make a wonderful decision with your money.
About the Author
Tarik Pierce writes for InvestorTrip.com, a financial investment advice website, and publishes a free stock market newsletter called "Global Market Insights" where he discusses global trends that investors can learn and profit from. Visit our website to compare stock brokers.
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