Discount Broker – Some Interesting Facts

Selecting between a full-service or discount broker is an essential decision for investors. You need to select whether you want the cost-effective and straightforward product or the expensive and service-oriented product.

Before making a decision about the opening of a specific type of brokerage account, it will be a smart idea to go for a better understanding of your choices. It will comprise of the comparison between the offered services and features, requirements of minimum opening balance, research as well as investment tools provided along with the cost of commissions and fees.

Traditional Brokerages

With the help of the brokerage accounts, a person can purchase and sell mutual funds, bonds, stocks, exchange-traded funds as well as other investment products.

Conventional “full-service” brokers perform more works than only facilitating the purchasing and selling of a bond or stock. Such brokers may offer a vast range of products and services, including retirement and financial planning, tax and investment advice as well as regular portfolio updates.

As you are receiving customized service and recommendations, traditional brokerages frequently come with heavy fees, usually charging 1-2% on the assets managed. The fees involved with traditional brokerage should be considered carefully, specifically if you are making an investment and planning for your retirement.

However, if a person does not want to make an investment on his/her own instead of giving preference personalized guidance and advice – in that scenario, a conventional brokerage could be an appropriate choice.

Discount Brokerages

An online or discount brokerage might be a better alternative for the investors, who want to go it alone. Such brokerages will usually not provide investment advice, however, it is common for a discount brokerage to provide free research along with educational tools to assist you in making the better and proper investing decisions.

Discount brokers have come in all sizes and shapes. Some will offer better investment tools, as compared to others but ask higher fees. On the other hand, others might offer only the fundamentals but ask the lowest fees.

With the help of a discount brokerage, a person can either perform a trade through the online mode automatically via a computerized trading system or can make a call in his/her order with a broker over the phone. The latter alternative can be a matter of more investment.

Some discount brokers ask annual account fees, however, this case can be different in some scenarios. The actual cost depends on the broker. You need to also consider the requirement of the minimum opening balance of each broker. Some brokers may also ask a fee in case your balance goes below a specific amount. You need to remember these important points while choosing your broker.

When it comes to the question of investment for retirement, discount brokers might be a simpler and lower-cost alternative. If you are searching for one-on-one guidance, don’t forget that some of the discount brokerages provide recommendations on personalized investment or professionally handled portfolios at an extra cost.

Now, you can easily make your decision. For more information, contact a professional expert in this field.