Before you pick an online broker

Reviewers agree that the best online broker for you is the one most suited to the type of trading you plan to do. Some reviews break down their data to show which brokers are best for various types of traders. Here's what experts say to consider:

  • 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.
  • Read everything on the broker's website about commissions and fees. 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.
  • Look out for minimums. With many brokers, there is a minimum amount needed to open or maintain an account, or to receive low commissions and trading tools.
  • Look for free trading tools. These include such things as real-time stock quotes and free market research and education.
  • It may make your life and tax accounting simpler to have all your investment accounts in one place. Look for an online broker with a wide selection of investment products and a variety of account types -- one that can be a one-stop shop.
  • Consider the interest. Compare the interest rate on cash in your account to what you can get elsewhere.
  • Find out the broker's policies on security. Look for guarantees that your personal information is protected and that your account is insured. Look for articles online about the broker to see if there are any recent reports that might cause you concern.

Many financial writers, including authors Andrew Tobias ("The Only Investment Guide You'll Ever Need") and David F. Swensen ("Unconventional Success: A Fundamental Approach to Personal Investment"), say you might not need a broker. They say it is virtually impossible for an individual investor to beat the stock market, and they recommend buying and holding low-fee, no-load index mutual funds purchased directly from a mutual fund company to form the core of a personal investment portfolio.

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