Brokers Fees And Charges Investors Have To Know
Having no idea what a broker charges for their services, makes it
hard to consider one. Without doing the homework ahead of time, one may
find himself blindly walking into a broker’s office, gets “pumped up” by
the broker, only to be hit up with an unpleasant surprise when
presented with astronomically high fees. This is simply a waste of time
for both the broker and the potential investor.
Still, every investor needs a broker, especially beginners. Fortunately, not all brokers charge sky high fees nor have the same minimum requirements. It pays to shop around rather than select the first broker you hear about or see. Some brokerage firms reside in high-rent, fancy offices, have high overhead costs and therefore charge more for their services. Other firms operate online and simply need just a computer with internet access. Since they work out of their homes, they can provide the same service for much less.
Having a broker you can interact with personally may seem nice, but will cost much more than an online broker. You may communicate online with a program as Yahoo Messenger or Skype and exchange emails between chat sessions. If you have a scanner, you can send images of paperwork when necessary.
Brokerage firms start out by requiring an initial deposit from each investor. This varies from one broker to the next. For example Scottrade requires $500; E*Trade, $1,000; TD Ameritrade, $2,000; Charles Schwab, $1,000; and Fidelity, $2,500.
Fees charged depend on what type of broker is used. Full service brokers offer a wide range of services plus work with each investor one-on-one. They do research and offer guidance plus conduct the transactions upon approval by the investor. Hence, they typically charge $400 to $700 per transaction. Discount brokers offer no advice or research, leaving the transaction decisions to the investors. Hence, each stock transaction may cost anywhere from $7 to $20 through this type of firm.
Some brokerage firms add on an annual account maintenance fee ranging from $25 to $200. This fee may be reduced or eliminated if either a certain minimal amount of money remains in the account at all times or a set number of transactions are processed. Hence, those with only a small amount of funds to invest should consider a brokerage firm that has no minimum requirements or a yearly account maintenance fee.
Since prices vary widely, it is best to choose one that best suits your investment needs and your budget. Become familiar with their fee charging terms and how they calculate commissions before opening an account.
Good Luck!
Still, every investor needs a broker, especially beginners. Fortunately, not all brokers charge sky high fees nor have the same minimum requirements. It pays to shop around rather than select the first broker you hear about or see. Some brokerage firms reside in high-rent, fancy offices, have high overhead costs and therefore charge more for their services. Other firms operate online and simply need just a computer with internet access. Since they work out of their homes, they can provide the same service for much less.
Having a broker you can interact with personally may seem nice, but will cost much more than an online broker. You may communicate online with a program as Yahoo Messenger or Skype and exchange emails between chat sessions. If you have a scanner, you can send images of paperwork when necessary.
Brokerage firms start out by requiring an initial deposit from each investor. This varies from one broker to the next. For example Scottrade requires $500; E*Trade, $1,000; TD Ameritrade, $2,000; Charles Schwab, $1,000; and Fidelity, $2,500.
Fees charged depend on what type of broker is used. Full service brokers offer a wide range of services plus work with each investor one-on-one. They do research and offer guidance plus conduct the transactions upon approval by the investor. Hence, they typically charge $400 to $700 per transaction. Discount brokers offer no advice or research, leaving the transaction decisions to the investors. Hence, each stock transaction may cost anywhere from $7 to $20 through this type of firm.
Some brokerage firms add on an annual account maintenance fee ranging from $25 to $200. This fee may be reduced or eliminated if either a certain minimal amount of money remains in the account at all times or a set number of transactions are processed. Hence, those with only a small amount of funds to invest should consider a brokerage firm that has no minimum requirements or a yearly account maintenance fee.
Since prices vary widely, it is best to choose one that best suits your investment needs and your budget. Become familiar with their fee charging terms and how they calculate commissions before opening an account.
Good Luck!
Comments