A stockbroker is a licensed individual or firm who trade on stocks and numerous other securities in the stock market. Online brokers are those who trade these securities via online platforms. Before now, investing in stocks was tedious, one would need a stock broker to place trades for them manually. These were hectic, costly and discouraging for some. But now, for just a percentage of what the old-time brokers charge, you can get your trades in via online brokers on the internet. If you are not fully aware of how the stock market works, check out our background article on how the stock market operates.
Now, for first-time investors, the market and its operations might seem somewhat confusing and nerdy, but with the emergence of online brokerage, the orientation has changed. The market is friendlier, the opportunities are bigger, and they are more brokers now which brings competition. Nonetheless, as with many other internet businesses, you must be self-aware and well-groomed on the rules and guidelines of the market. You also must do proper research in other not to invest wrongly or put your money in the hands of scammers.
Investing in the stock market comes with its risks especially for those looking for short-term ROI (return on investment). But with proper guidance, you can easily make it big. So for first-time investors or small investors, they are things you need to consider before investing.
Things to consider while investing in the stock market
Here are a few things to consider while venturing into the market;
• Are you ready for the market? Considering the risk involved in the market, as a first-time investor, you must access your readiness to invest. Do you have a solid financial foundation? Do you have a financial support system? Are there not safer options for you like using certificate of deposit? How will this affect you in the short and long run if the market falls? You need to know where you stand in all these.
• Do proper research: most brokerage firm will help you with this. You must be aware that any investment that is to yield high rewards also comes with high risks. So do proper research, understand the risks involved with the options you intend to trade on then consider your financial position.
• Consider the costs involved: things like trade charges, account fees, and management fees could be a hindrance to your returns. So it is recommended that you thoroughly check these costs out before you proceed to invest.
• Do not put all your eggs in one basket: this adage comes in handy here. When investing, ensure you diversify, spread your funds across various investment options. This ensures you can effectively engage in risk management in any event.
Best Online Brokers
Below is a list of some of the highest rated and well known online brokerage firms which are perfect for new investors in the industry;
• TD Ameritrade: one of the leaders in online brokerage business with a variety of investment options for their customers. TD Ameritrade offers great commissions, services including research and trading tools which is perfect for both first-timers and active traders.
• Betterment: this firm helps you invest automatically in exchange-traded funds (ETFs) based on your set asset allocation. Betterment annual charges are between 0.25% and 0.50% although it depends on the option you choose. Their plus brokerage account requires a $100,000 minimum balance while the premium account requires a $250,000 minimum balance.
• Scottrade: this firm allows investors to invest in individual stocks with ease. They provide discount brokers online with same benefits as full-service brokers. As a first time investor, Scottrade guides you through each step via its services like educational resources, in-person support, and free seminars and for advanced traders, they provide great market research tools.
• Charles Schwab: with a strong customer service reputation, Charles Schwab offers strong competition for others in the industry. They offer two trading platforms, no transaction fee for mutual funds and a commission-free ETFs. The company offers a refund for unsatisfied customers.
• Motif Investing: the company provides investors a platform to trade up to 30 stocks or ETFs each based on a specific trend, theme, industry and all for a low commission. Motif’s services are unique, it might be tricky for beginners, but they offer customized portfolios which are built in seconds.
There are many more online brokerage platforms open for both beginners and active investors. You can check them all out here.
In conclusion, for first timers, the market is now more open than ever. It’s now also easier to trade online and also cheaper. All you need to do is make a thorough research of the platform you want to invest in and know how the market operates.