How To Choose Best Stock Broker For You ? | 7 Key Factors To Consider While Choosing A Broker
Stock Brokers plays a vital role in your investment journey. But there aren’t any definitive guide on How To Choose Best Stock Broker For You that is suitable to your trading and investment needs. So this article delight gives you out some pointers on how to select the best stock broker in India.
What Is a Stock Broker?
A stockbroker is a regulated representative of the financial market who enables the buying and selling of securities on behalf of financial institutions, investor clients, and firms. A stockbroker is also called a registered representative . The trading or purchase or sale of stocks on the national stock exchanges are usually executed through a stockbroker. Stockbrokers handle transactions for both institutional and retail customers. The primary job of a stockbroker is to obtain buy and sell orders and execute them. Brokers provide that service and are compensated either through commissions, fees, or payment by the exchange itself. Go through the list below to compare & analyze different stock brokers of India along with other details such as account opening and maintenance charges, equity delivery charges, equity intraday charges etc.
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Now continuing with How To Choose Best Stock Broker For You
How To Choose Best Stock Broker For You ? | 7 Key Factors To Consider
Full-service brokers vs. discount brokers
As the name suggests, full-service brokers routinely offer individual advice and recommendations, and these services don’t come cheap. A full-service broker does much of the legwork for the investor. While discount brokers generally leave you to make your own decisions, although many offer the option to solicit a broker for advice on a particular trade for a fee. Today’s online discount brokers typically provide a vast array of tools for investors of all experience levels. You’ll learn a whole lot more about investing if you do the legwork yourself. Zerodha , Groww, Upstox etc comes under discount broker, while Angel One , ICICI Direct, HDFC securities etc. are full service brokers.
Mutual funds and other investment options
If you’d like to buy and sell mutual funds through your brokerage account, look into the funds that the brokerage has tied up with and the services it offers. If you want to invest in options, exchange-traded funds, or ETFs, or fixed deposits, ask whether the brokerage offers these products. The costs of these services must also be looked into. For example, discount brokers do not offer such facilities, but full-service brokers do. Some full-service brokers may not offer products of all asset management companies or AMCs.
Fee Structures and the Fine Print
Some brokers have complex fee structures that make it harder to figure out what you’ll be paying. This is particularly common among broker-resellers who may use some aspect of a fee structure as a selling point to attract clients. There should be ‘no’ or minimal hidden charges while investing and trading. All the charges incurred while transactions should be specifically mentioned. If a broker seems to have an unusual fee structure, it’s all the more important to make sure that it’s legitimate, suits your best interests, and complements your investing style. Read the fine print in the account agreement and fee summaries if the rates seem too good to be true. Most stockbrokers offer brokerage calculators on their websites now. Remember, transparency is the key to any service.
Investment Styles
Your choice of broker should be influenced by your investment style. Are you a trader or a buy-and-hold investor? Traders don’t hold onto stocks for a long time. They’re interested in quick gains greater than the market average based on short-term price volatility, and they may make many trade executions over a short period. If you envision yourself as a trader, you’ll want to look for a broker with very low execution fees, or trading fees could take a big bite out of your returns. A buy-and-hold investor often called a passive investor, holds stocks for the long term. Many investors will find that their investing style falls somewhere between the active trader and the buy-and-hold investor. In such cases other factors will become important in choosing the most appropriate broker.
Background & Reputation of the broker
The first step is to check the background of the stockbroker and their reputations. How old are the brokers and what their customers say about their platforms? You can read the reviews, complaints and have a survey of the personal experience of the existing users. If you are going to use the mobile app to make investments, check the mobile app ratings on the google or app store. Another way of checking the reputation of brokers is by looking into how big they are based on their total number of active clients. The bigger the stockbroker, the more stable will be its trading platform.
Customer Services
Investing using online platforms is easy to use and has a number of resources available on the internet. However, there may be such times when you will require technical support. It’s good to have someone to look for in such cases. So do not dare to avoid customer services. An easy way is to try calling their customer care helpline number. If it takes years for the customer executive to pick up the phone, then avoid that stockbroker. In addition, you can also look into if Investors Education initiatives or archives of issues are available that you can navigate through in case you’ve stuck anywhere.
Course Tools available for Learning
Many stockbrokers provide education facilities to their clients. For example, Zerodha educates its clients via ‘Varsity’ and through its blog for free. If you are in the learning phase, look if any tools of education are available with your stockbroker. This is not a ‘must have’ factor for your stockbroker, however, it can be a worthy add-on.
Final Takeaway | How To Choose Best Stock Broker For You ?
There are dozens of brokers out there, that offer hundreds of features. Each broker has its own pros and cons. Now, which one would be the best for you? Also, it can be a hassle to change your broker once you have actively started investing. So, it’s important to take the right start. The above 7 key points on How To Choose Best Stock Broker For You helps you compare India’s most brokers side-by-side, and choose the one that matches your needs.
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