What kind of Broker to use when buying stocks
Discount or Full service broker?
If the average person has ever thought about trading stocks the question of using a discount broker or a full service broker has probably crossed the mind of the new investor. Trading stocks may sound complicated and intimidating which is exactly what the full service brokers would want you to believe. If you want someone to hold your hand and make the decisions on how to invest your money then by all means, choose a full service broker.
I’m sure there are probably situations where a full service broker would be the best choice but for the vast majority of investors, I think discount brokers are far and away the best choice. The research tools available on the websites of these discount brokers can give the average investor information that years ago was only available to the high priced full service brokers. All of these sites give you different ways to screen for stocks and have free research reports on different stocks.
Of course the main reason to use discount brokers are the commission prices which are generally under $10.00 and some are half of that. Makes the full service broker's commissions look outrageously expensive. Kiplinger's magazine anually rates the best discount brokers. I have used “Firstrade,” “Tradeking,” “Fidelity,” and “optionsxpress” I believe you can still open an account with all of these except Fidelity with no minimum deposit. Other services such as buying mutual funds, bonds, and options are also available as well as check writing on your account.
Besides the information on the websites of discount brokers there are many, many legitimate websites that offer advice and recommendations on different stocks. I use the finance section on yahoo with Investing Ideas one of my favorites. It's a section of yahoo finance with daily advice on stocks. Another good choice is the finance section of MSN. Now for the investor that only has a few bucks a month to invest I strongly recommend investing in DRIPS. The article I wrote explains what drips are and how easy and cheap it can be to invest a few bucks a month in stocks – commission free. If you have an extra $25.00 dollars a month you can be investing in stocks through DRIPS.
I think everyone should invest in stocks or mutual funds. Long gone are the days when you could get a decent rate from a savings account. Buying stocks is easier then programming your home stereo system.
- Dividend-Reinvestment Plans (DRIPs) and My Portfolio
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