If you’re looking for online brokers, you have a wide variety of options available to you. While almost all online brokers offer competitive costs when compared to offline brokers, there are other factors you’ll want to keep in mind when you’re comparing online brokers, including:
Check That The ETFs You Intend to Buy Are Offered By The Broker
Not all ETFs are available through every broker. If you have ETFs in mind that you know you plan to buy, you’ll want to check that the online brokers you are considering using offer those funds.
Compare Costs On Various Categories of Transactions
When comparing online brokers, one of your biggest considerations is going to be the cost per transaction. Obviously you want to use a broker which offers you the lowest prices for the types of trades and transactions you intend to make, to give you higher profits.
Do you want to call your broker directly to place your order? If you prefer phone trades over the internet, make sure you check pricing on “assisted trades”, as these are called. Some online brokers will charge higher fees if you call to make your order rather than use the internet.
Account Minimums of Online Brokers
Do you plan to keep a minimum balance or trade over a certain amount on a consistent basis? There are many brokers who offer lower prices to individuals who maintain a certain minimum balance, or who trade over a certain amount per month. In some cases, brokers will require that you keep a minimum balance, but not offer a discount for the amount or for a particular volume. Consider how much money you are likely to invest and the number of trades you intend to make regularly when comparing pricing structures and fees across various online brokers. Keep in mind if you have long periods of inactivity, you’ll sometimes be charged an “inactivity” fee, as well. If you’re someone who only trades once in awhile, you may want to find a broker who doesn’t charge the inactivity fee.
Look at the different categories and compare costs for each of the following among several online brokers to see who offers the best rates for what you will need:
- Automatic Investing
- Options Trading
- Market or Limit Trade
- Buying No Load Mutual Funds
Do Some Background Checking on the Online Broker
Since the online broker you choose is going to be dealing with your money, it’s a good idea to spend some time researching the company and the broker. Check online forums to see if other people are discussing particular brokers, search Google to see if people are blogging or complaining (or maybe even raving!) about a particular broker. Do they offer good customer service? You can find out a lot by reading what other people have to say, but keep in mind that some people will exaggerate a bad experience when complaining about it, so read everything with a grain of salt and use it as your starting point rather than your deciding factor.