If you plan on trading bonds or stock options, or plan on making trades over the phone as opposed to online, be sure to compare what each the best stock brokers charge for these activities. If you are a brand-new investor and only want to invest a few hundred dollars at first, you'll probably want to look for a broker with no minimum investment requirement.If you primarily plan to buy mutual funds, you should look for the best mutual fund broker, since these brokerage accounts offer low to $0 commissions to buy and sell mutual funds.If you plan to simply buy and hold stocks, you probably don't need a full-featured trading platform.Here are a few things you might want to consider: The best online brokerage account for you depends on your needs. LEARN MORE: Best stock brokers for beginners Most trading actually takes place between computers in dimly lit server rooms in New Jersey, a few miles from New York City’s financial district. In truth, the stock exchanges as we think of them from their depictions in movies and on TV don’t really exist today. You and I can’t knock on the doors to the stock exchanges and make a trade without a broker. This process was complex - and expensive. To buy a stock, you used to have to call an individual known as a stockbroker, who placed the order on your behalf. In exchange for a commission on every trade, these brokers send your orders on to stock exchanges and market makers, which actually do the heavy lifting of matching your buy order with someone who wants to sell, or vice versa.īut you can't just buy a stock through your bank account or call the company and buy shares - you need to find one of the best stock brokers.įortunately for everyday investors, the brokerage industry has changed dramatically over the past couple of decades. You can think of an online stock broker as a conduit to the stock exchanges. For example, Merrill Edge® Self-Directed is the discount brokerage arm of the full-service brokerage Merrill Lynch.Īn online stock broker is a financial firm whose customers can buy and sell stocks in a brokerage account through an online trading platform. Some full-service brokers also offer a basic level of service at discounted prices. Discount brokers now have wealth-management services that offer the help of a human advisor at a full-service price. Realistically, the lines between the two types of brokers are starting to blur. Full-service brokers are more likely to have higher account minimums some advisors only work with clients who have $1 million in assets or more. Buying a mutual fund through a full-service broker can potentially set you back thousands of dollars, since they often charge fees equal to a portion of the amount you invest. A popular full-service broker charges a minimum of $75 to place a stock trade, and that can jump as high as $500 or more to buy a large amount of stock. That said, full-service brokers are costly, since people are inevitably more expensive than computers. Full-service brokers often employ human brokers who can help you make a trade, find mutual funds to invest in, or make a retirement plan. Full-service brokersīrokerage firms we label "full-service brokers" are more closely related to the stockbrokers of days gone by. In addition, discount brokers tend to have lower minimum investment requirements (or no minimums at all), making them accessible to everyone. The best online stock brokers charge $0 to place a stock trade - a bargain, especially considering what traditional brokers charge. Because discount brokers forgo many of the frills, they can charge rock-bottom prices for their services. Instead, discount brokers focus on the very basic service of helping you buy or sell a stock (or other type of investment) from the convenience of your own home. They aren’t in the business of giving you advice or phoning you up with stock picks. Online stock brokers are discount brokers. Today, instead of using the term "stockbroker" as an all-encompassing term for any person or brokerage firm that deals in stocks, we generally divide companies into two categories: "discount brokers" and "full-service brokers," labels that better describe what they actually do. Just as the process for processing stock trades has changed, the terms we use for the people and businesses who facilitate trades has changed, too.
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