The moment you are planning to invest, the first thing you need to be aware is to choose a broker. Without their services it is virtually impossible to buy or sell securities in any form. For a newbie who is planning to make an investment the cost associated with a full service broker is hard to bear. Better news is that you do have options in the form of top discount broker. They are going to provide you with basics of stock investing and will not render any advice. They earn money from the execution of your trades and a commission is levied on each transaction. There charges are lower and you need to possess less money when opening an account with them.
Now the question is discount broker work out to be the best choice for you? Let us now explore how a discount broker can help you and figure out whether they work out to be the right option for you.
Comparison of full time service brokers with discount brokers
The choice of the right type of broker would boil down to your investment needs. With a full time service broker you will gain personalized advice, detailed inputs on which stocks to invest and in depth financial planning. This can help you avoid unnecessary tax on your investments and help you achieve your long term goals.
On the other side discount brokers are going to simply execute your trades and they do possess some benefits. They operate on a module of commission per transaction and there is no form of annual fee. If a full time service broker suggests a stock and they are paid on commission you need to take it with a pinch of salt. Down the lane their financial incentives are related to your financial goals.
Which is the best type of brokerage as per your needs?
In your choice of stock brokers the most important of consideration is you as an investor. In certain cases a discount broker would be wrong for an investor, but availing the services of a full time broker means you need to pay more for services along with advice which you might literally not need even.
It would be really important that you sit across the table with your financial broker and specify your financial objectives and plans. Though a discount broker will not be a better choice in such cases. But if you are looking for a broker who has been part of a research module and you would like them to suggest investments then a full time service broker is better. Such type of services you are not expected to gain from a discount broker.
With relative ease in opening up of an account with a discount broker it could be really tempting for a beginner to open an account with a discount broker. Various options are available via online resources which makes DIY investment education at no extra cost.