After you have created your investment plan the next task to tackle is selection of your first broker. Selecting a broker is super important as you do not want to go through the pain to change it if you don’t like the original broker you had selected.
What makes your broker selection so important is that it essentially is your “safe” for your entire investment portfolio. You will sink your entire portfolio in to the investment accounts that you open with your broker. You had better trust them!
When searching for your first broker, there are many factors to consider. We will take a look at some of the items to look out for. I would suggest creating a Selection matrix tool and rate each broker that you are interested in for the categories that you find are most important.
Top 5 factors to consider when selecting your first broker
Let’s take a look at different factors that effect your decision for selecting your first broker.
- One of the first items to look at is account minimums. An account minimum is the initial amount of money that you must transfer in to the particular account. Depending on what you plan to invest in, will determine if the minimum for an account is suitable for you. For example my portfolio is made up of 4 different account. I had to be certain that I had the minimums met as my portfolio only had 25% of its value per account approximately. Expect minimums to be anywhere from 0 to $10 000.
- Next, you will want to understand your investment selections by using your plan to select a broker that has the lowest commissions for the assets you plan to purchase. The lowest commissions are not the only thing to consider, however they are an important broker selection factor. Expect to pay anywhere from 0 to $40 per trade.
- Product support is another key item to consider. This is just to be certain that the brokers you are looking at all contain the products that are on your investment plan. There are many different investment options that not necessarily every broker supports. Make certain that the brokers you are interested in, supply what you require and what you could require in the future.
- Review the account specifics to be certain there are no fees associated with the account you plan to open. Some brokers have fees for new accounts while there are plenty of brokers that do not have any new account fees or similar.
- Don’t forget to consider any incentives that help you get started. Some brokers provide incentives to encourage you to open an account with them. Sometimes this little boost can make the difference between a broker that is making an effort to gain your business or a broker that really doesn’t care about customer support.
From the above factors to consider when selecting your first broker, you are looking for the broker that has the best overall features that support what you require.
Be certain to read users reviews
This is a very important step when selecting your first broker. You must make certain you spend some time researching the brokers that you are interested in. Specifically, you need to look for other users opinion, who use the particular broker services. You want to answer all the questions that the broker would not typically place on their website. Some of these questions could be, Is the broker reliable? Does the broker make it difficult to get your money back out or even with canceling accounts? Are the brokers applications reliable, do they ever go offline?
Some of these questions you may not even be interested in, however it allows you to see more about the company other than just face value. You are able to see if the company truly has good customer service, even if the customer is trying to remove their money and cancel accounts. Let’s face it, no broker wants you to close any accounts. However, if you do, I hope they are asking you why and trying to do what ever they can.
Consider this part of you search the “background check” on the brokers you are interested in.