How to Choose an Online Broker
Updated July 2013
best online brokers have
- Free trading tools. These include such things as real-time stock quotes and free
market research and education. The
online broker's web and mobile interfaces should be logical and easy to use.
(You can try most before committing to a broker.)
- Strong security. Look for guarantees that your personal information is
protected and that your account is insured; mobile and online accounts should
be password protected. Check for news about the broker to see if there are any
reports of irregularities.
- Reasonable (and clear)
commissions and fees. Competition between online brokers is
fierce, and prices fluctuate widely based on the provider and your type of
investment. If you're an infrequent trader who primarily invests in mutual
funds, make sure to understand the fund's fees and how they will affect your
- Quick trade times. Online brokers should offer immediate or scheduled trades,
including the ability to purchase at the start of trading, when the markets
close and even after hours. Ask how long trades take to process before signing
- Mobile options. The vast majority of online brokers have mobile trading and account information, but not all are compatible with every
mobile device. The best have charts, research and other technical information
on mobile platforms.
- Good customer service. The best online brokers have multiple options for customer
service, including live chat, email, phone, branches and 24-hour support.
before you buy
- Think about how much trading you will do. If you plan to
invest in a retirement account or an education savings plan, you probably won't
trade often. You may simply want a reliable broker with a good selection of
investment products and the planning and analysis tools to help you choose
among them. If you plan to trade fairly often, you may want a broker with low
commissions and fees and good trading tools. If you plan to trade frequently,
direct-access trading and mobile access to your account could matter the most.
the fine print. Does the commission change based on type or size of order or how
frequently you trade? Look for additional fees such as an inactivity fee or
fees for closing your account.
- Beware of minimums. With many brokers, there is a minimum amount needed to open or maintain an account, or to receive
low commissions and trading tools.
- Do you need banking? Some, but not all, brokerages offer banking along with
online trading. If you want to consolidate your finances, banking with your
broker is worth looking into.
forget cash. Compare the interest rate on the cash
in your investment account to what you can get at a savings bank or elsewhere.
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