Stockbrokers tend to get a negative reputation as being greedy conmen thanks to popular culture. Whilst there are definitely a few bad eggs out there, not all of them are going to take advantage of your money – many brokers want to make a profit for themselves, but they also want to keep their clients happy, which means not ripping them off.
Brokers do tend to be experts in their field and if you have little understanding of how stocks work, you’re bound to make more of a return by investing with them than by gambling solo. That said, you should still have your wits about you when choosing a stockbroker to invest with. Here are just a few tips for picking the right broker.
Understand what kind of service you want
Some stockbrokers may specialise in certain types of stocks, whilst others may explore all kinds of possible options. Some prefer clients that make regular investments, whilst others may cater to one-time-only investors. There are even some brokers that simply offer advice rather than executing investment for you (these can be great for giving you the final say on where you invest).
Make sure you know exactly what criteria you’re looking for before getting involved – if you only want to make a single investment in stocks, you don’t want to accidentally take on a broker who expects you to make regular investment and may charge an inactivity fee if you don’t make these contributions.
With this in mind, it can be helpful to do plenty of research into the markets that interest you before you start trading stocks and shares. For instance, if you are reading from Canada, websites like stocktrades can be an incredibly useful resource. Navigating the markets can seem overwhelming at first, but by completing some research you can make the right investment decisions for your finances.
Get a clear idea of what you’re paying
Many brokers won’t tell you their fees unless asked, so it’s best to bring this matter up straight away. By having a clear idea of the fees they charge you can then compare prices of other brokers. This won’t be a very easy process as many brokers will try and rope you in as soon as you show interest, possibly ringing or emailing you back to check if you’re still keen.
Make sure that there aren’t extra hidden fees you need to watch out for such as inactivity fees. By asking for all this information upfront, you can avoid being caught out later.
It’s best to always read reviews
It’s always worth reading reviews online before choosing a stockbroker. This gives you a good idea of how reliable a broker is based on what other customers thought of them. Dodgy brokers may try to throw you off guard with fake reviews, but these are generally easy to spot due to the simple non-descript wording.
If you don’t trust human brokers, you can always use software
Rather than using a stockbroker, you could use an automated trading system. These are pieces of software that can calculate the best investments based on hard stats and figures and then execute these for you.
There are also robo-advisors on the market that simply advise you on which investments to make. These can give you control over the investing your money if you’re looking for a more hands-on investment.
Like brokers, you will have to pay fees to use these programmes. An advantage of using them is that you don’t have to worry about a broker making a biased investment simply to strengthen relationships with a company – software will act purely on data interpretation.