Make a Wise Investment

Astockbroker is your agent in the stock market andhe is licensed to buyand sell shares. Against this service he will charge a fee and this fee varies from broker to brokerdepending on the nature of service provided. Brokersprovideyou with the market research on domestic and foreign trends, help you plan your investment and regularly update you and advice you on shares, government bonds and other listed and non-listedinvestment opportunities.

What kind of broker am I looking for?
Therearetwo main categories of brokers:full-service brokers and discount brokers.

A full-service broker provides step-by-step guidance to the customer. He will advice you onthe purchaseof shares, plan your financials, analyze your investment and provide full customer support. Because of these services full-service brokers chargemore than discount brokers.

A discount broker on the other hand shall not advice you on the investment trends or provide you with detailed market research. He will carry out transactions according to your specifications. Discount brokers charge lower fees but you lose out on customer support. The success of the dealings will depend on how well you are informed about the market. Before you settle on a broker it is recommended that you survey differentcompaniesfor their brokerageand decide which is best for you.

Investors, who are stock savvy and capable of deciding which stocks they want to buy, approach discount brokers. But if they are not well informed about the companyin which they wish to invest they will approach a full-service broker.

Where do I look for a broker?
If you have friends dealing in stocksthey can recommend yousome names. Market survey will also provide names of brokers with good reputation. Broker Referral Servicemaintained by The Australian Stock Exchangewill provide you with the list of brokers. You can search for brokers onlineand commence trading.

Whatinformation should I gather from my discount broker?What are the chargesfor buying and selling shares? How will the broker be available to me: over the net of telephone? You need to clarify any doubts regarding their subscription fee. Sometimes brokers offer discounts if you aretrading quite often with them. It is an incentive they offer as trader discounts. You shouldalways enquire about perks offered to customers. Though you are aware ofthenature of their servicesyou should enquireif they provide anycompany researchor market research data.

Whatinformation should I gather from my full-service broker?

Knowabout their charges. As they providecustomer support and personal attentiontheir charges will vary according to the nature of services provided. Youshould survey the market for their researchcapabilities. The advice you on investment strategieswhich is largely dependent on their marketresearch skills.

Know how they intimatetheir clientsabout the latest investment trends. Many companies have regular updatesthat they mail their clients. Information is the key here; you must clarifythese points before deciding on a broker.

Anotherimportantconsideration before you open a brokerage account is that of minimum opening balanceand maintenance fees. The minimumopening balancerequiredby somecompanies is quite high. Some brokerage firms also charge a maintenance feeifyour balance falls below a specified amount. Know the company policies in detail before finalizing your choice.

Each brokerage type has its advantages and disadvantages thereforeyou need to be well informed and sure about what kind of brokerage would be ideal for you.

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