Discount Brokers

Discount Brokers

Discount Brokers

Questions and Answers



Are discount brokers right for me?

If you can make your own investment decisions, discount brokers can save you money on commissions and other fees. If you want to keep your account with one of the non-discount brokers, you might benefit by opening another account with one of the discount brokers and having them do some trades for you.

There are so many discount brokers. How do judge which of the discount brokers is best for me?

Research discount brokers on the internet and see what they offer. Some discount brokers offer the lowest commissions for in person stock trades, other discount brokers offer the lowest for option trades, and some discount brokers are best for mutual fund trades. If you are comfortable with the risks of leverage, find the discount brokers offering the cheapest margin rates. First figure out which are the greatest uses you will make of your discount broker, and select that discount broker offer with the best rates for those uses.

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I’m used to getting research from non-discount brokers – what should I do?

First, keep your current non-discount brokerage account and keep getting that research – just don’t give that firm all your business. Also, some discount brokers offer much research – independent research from third parties – and it may have more research than what you are getting now. Explore what the offerings are of these discount brokers before you decide on where to open an account.

Seem pretty simple. What else should I keep in mind?

Some discount brokers have minimum opening balance requirement, limited customer service, no local office, “inactive account,” “account maintenance,” and other account annoying fees, no or limited mutual funds available, special order-handling fees (i.e. an order given to a person costs more than an order given over the internet), and other types of fees.