Home Business Finance Starting with Stocks: Best Online Brokers to Open a Trading Account With

Starting with Stocks: Best Online Brokers to Open a Trading Account With

stock broker

Congratulations! You’ve done your homework, memorized the Motley Fool’s guide to investing and you’re ready to invest in your first stock. All you have to do is fire up your computer, search for the cheapest online brokerage firm and start trading, right?

Wrong!

Choosing the right firm and setting up the right trading account can go a long way towards ensuring you get off to the best possible start. It can also help you earn more money regardless of how much risk you’re willing to take on.

What Type of Trading Account?

The first thing you need to decide is what type of trading account to open. You have several choices.

Individual

A Rose by any other name … is not the same when it comes to online trading. Your bank account name and your trading account name must match exactly.

Joint

There are two types of joint accounts: tenants in common and joint with right of survivorship (JTWROS). A husband and wife would normally open a JTWROS account, but again, be sure you use the form of your names that match your bank account.

Retirement (IRA, Roth IRA, rollover, SEP)

Retirement accounts earn you money on a tax-free basis but do come with strings attached regarding when you can begin to withdraw your money. You should consult a financial advisor about the best type of retirement account for your particular circumstance.

Custodial

The most common type of custodial account is a Uniform Gift to Minors Account. Parents or grandparents frequently set these up to help fund a child’s college education. You should be aware, however, that once the child comes of age the money is his to do with as he pleases.

How Much Will You Invest Initially?

Even the popular online trading accounts have minimum investments. In their comparison of TD Ameritrade vs Fidelity, Investor Mint points out that while TD Ameritrade has no minimum balance, Fidelity requires a $2,500 initial minimum investment.

What Type of Investments?

Will you be investing in individual stocks and bonds or mutual funds? Will you set aside money for hard asset investments like gold or diamonds? How much risk you are willing to take on and how long do you plan to hold on to the investment?

Your answers to these questions will help you narrow the field of possible brokerage firms that are right for you. However, they aren’t a substitute for doing your homework on the reputations of the firms that make your short list.

Investing for the Long Run

There’s one other thing you should be on the lookout for. That’s how much, and what type, of advice, each firm is prepared to offer you. Some firms will go out of their way to provide tips and tricks to help you get the most out of your new investments while others concentrate on making sure your trades get executed quickly.

Once you’ve taken the time to do this homework actually opening your first trading account will be fast and easy. Most online applications take minutes and transferring your initial funds into your account can be done in a day or two.

The only thing left to do before you pull the trigger on our first trade is to determine what your long term investment goals are and begin selecting the stocks or bonds that will help you get there.

Melissa Thompson writes about a wide range of topics, revealing interesting things we didn’t know before. She is a freelance USA Today producer, and a Technorati contributor.

Exit mobile version