Do I Need A Stockbroker?

If you’re planning to hold stock of a company for a long time and are not interested in ‘day-trade’ then “direct stock purchase plan” (DSPP) can help you get what you want. With the DSPP you can buy the stocks directly without involving a broker.

You can also reinvest your dividends that you receive from your current holding, this method of acquiring stock is called the dividend reinvestment plan or DRIP for short.

Brokerage Fees

Brokerages buy the stocks for you, hold them, and then sell them on your direction. Clearly all this comes at a price. Custodial fee is charged by the brokers for handling your portfolio according to your instructions.

But if you’re liaising with the advisor of the firm, you might be in for an investment advisor fee as well that will set you back even further.

Some brokerages charge a flat amount every month that allows you access to their investment tips and opportunities.

Asset Management Account – A Hybrid System

The world is evolving and stocks are evolving with it. Many brokers and firms have moved towards an asset management account that allows them to manage your insurance, your banking, and your securities all in one.

When all your portfolio comes into one account, this increases your relevant credit score and allows you to make transactions that wouldn’t have been possible before. This is because some high level securities actually require a minimum deposit of around $5000 to be able to invest properly.

Trade Confirmations and Investment Security

A trade confirmation is document that clearly shows the trade transaction that occurred. This includes the number of shares, the date of trade, the fee that the brokerage charged, and other such details that may be relevant to that transaction.

People have all sorts of buying patterns when it comes to trading securities, and chances are if you sell your securities fairly quickly your investment will not be transferred to your name during the little time you held it.

Instead, the transaction is under a ‘street name’ that may be an alias for you in the particular brokerage. The brokerage is making the trade on your behalf but the ownership certificate for securities need not be issued in such a scenario.

Investors should also understand that the brokerage is a company and like any other company it can be forced into bankruptcy. In such a scenario, your investment can be safeguarded by the SIPC (Securities Investor Protection Corporation).

Your portfolio can be transferred to some other brokerage in such an event if your brokerage is a part of the SIPC platform.

Top 5 Brokers February 2022

There are a number of different brokers out there but the ones that stood out the most include:

• Fidelity Investments
• Merrill
• E*Trade
• Interactive Brokers
• Webull

All the brokers we selected bring $0 minimum requirement and offer some exciting discounts or promotions that make them worth it.

Where can you learn to trade stocks?

Thinking about investing but are lacking the confidence? We have discussed many important aspects that you need to know for trading but if you still need more information, Investopedia has the most comprehensive guide on investing that will be all that you need to get through investment decisions.