The Best Online Brokers for You
To make your financial dreams come true through investing, you'll probably need to sign up with a brokerage. These days, online brokers are the way to go for most of us, offering convenience and low prices, among other things. Browse the Internet or flip through some periodicals, and you'll find lots of rankings of the best online brokerages. But don't just go with numerouno. Take a little time to determine which of the many online brokers out there is best for you.
Here are a few key factors to consider.
Sure, online brokers with the lowest commission costs and other low fees are enticing. But there's more to a brokerage than just cost, and a lot depends on your investing style. For example, if you are a good buy-to-hold investor, hanging on to most of your holdings for many years, then you probably don't trade often. If you're considering two online brokers, one of which charges $10 per trade, and one which charges $5, you're only talking about a $50 difference, in total, if you place 10 trade orders per year. If you're an active trader, though -- and remember that such folks often underperform -- trading once a day, or about 250 times a year, a $5 difference becomes $1,250. A brokerage's costs are much more important to some people than to others.
Factor the services of online brokers into your deliberations, too. Do you prefer having a brick-and-mortar location available so you can speak with someone at the brokerage face-to-face or conduct a transaction there? Then seek online brokers that have physical locations nearby. Check out customer service, too. A brokerage's website might let you know if it offers 24-hour phone support, for example. And you might dig up some reviews online, too. The folks at stockbrokers.com, for example, recently listed the best online brokers for customer service, ranking Fidelity Investments at the top. Think about all the services you might want and use. If you're interested in the stock research reports (or other research) that many online brokers offer, look at each contender brokerage and see which one offers the most appealing range. If you want to buy and sell shares of mutual funds, see how many funds are available through a given brokerage and how much it costs to trade them.
Don't overlook the importance of account minimums -- at least if you're an investor of limited means. Some good online brokers have account minimums of $2,000 or more, but many others require just $500 or less. Some don't even have a minimum!
Finally, check out what other extra features are available at the online brokers you're considering. Some, for example, offer banking services such as check writing and online bill-paying. Others have strong investor education nooks that can be helpful. Some are even branching out into financial planning services and insurance. Keep in mind that a brokerage might not always offer the best banking services or insurance products, but it's worth looking into. Finally, if you're interested in accessing your account on your smartphone, check out the available apps - and the security measures they offer -- for online brokers you're considering.
With these factors and any others that are important to you in mind, check out some solid online brokers, and see which one seems to best fit your needs.
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The article The Best Online Brokers for You originally appeared on Fool.com.Longtime Fool specialistSelena Maranjian, whom you can follow on Twitter, has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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