Tips on how to choose a broker
Depending on the type of investment you plan to make, you may need to hire a broker to manage your investment. Brokers work for brokerage houses and have the ability to buy and sell shares on the stock market. You may wonder if you really need a broker. The answer to that is yes.
If you intend to buy or sell stocks on the stock market, you need to have a broker.
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| How to Choose a Broker |
Stockbrokers must pass two separate tests to be licensed. These tests are very difficult, and most brokers have experience in business or finance, including a bachelor’s or master’s degree.
It is very important to understand the difference between a broker and a stock analyst. The analyst literally analyzes the stock market and predicts what it will or won’t do, or how certain stocks will behave. A stock broker is only there to follow your instructions to buy or sell stocks… not to analyze stocks.
Brokers often earn from sales commissions. When you instruct your broker to buy or sell a stock, they receive a percentage of the transaction. Many brokers charge a flat fee "per transaction."
There are two types of brokers: full service brokers and discount brokers. Full-service brokers can often offer many types of investments, provide you with investment advice, and are often paid on commission.
Discount brokers usually don't give any advice or do any research - they just do what you tell them to do, without all the bells and whistles.
So when it comes to brokers, the biggest decision you have to make is whether you want a full-service broker or a discount broker.
If you’re new to investing, you may need to contact a full-service broker to make sure you’re investing wisely. They can give you the skills you currently lack. But if you are already familiar with the stock market then what you really need is a discount broker to handle your trades for you.
Source: assimilationangle.blogspot.com
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