4 Most Important Things to Consider
When Choosing a Brokerage Firm for New Investors
When the time comes to start investing whether for wealth or retirement, a brokerage's services
and its cost go a long way toward securing and growing your hard-earned money potentially.
Your choice of a brokerage firm as a beginning investor makes a huge difference in the amount and
quality of services you are going to receive as a client. What's even more important is that your
choice of a broker determines the price of investing in the form of commissions and fees, which can
considerably lower your earnings.
#1 Look For a Regulated, Highly Experienced And Trusted Broker
It is pretty
obvious that you'll get a better service from a highly experienced trusted brokerage firm than from
a company that is just starting out in the industry. The safest brokerage firm for new investors is
a respected one with a long history in the business, which is also regulated by FINRA and SIPC.
SIPC protects up to $500,000 against the loss of cash or securities, and FINRA regulates trading
in equities, corporate bonds, securities futures and options. In other words, you can expect more
from brokerage firms that are members of SIPC and FINRA since they provide an extra layer of
protection and security to customers. All major U.S. brokerage firms are members of SIPC and FINRA.
#2 Highly Advertised vs. Lesser-known Brokers
Unfortunately, a majority
of new investors are not even aware of all the possibilities available to them when it comes
to opening a first brokerage account. If you take a look at the industry's top advertisers,
it is likely that you'll notice just a few well-known companies with a big name and a long history
such as Fidelity, Etrade, Schwab and others. Those companies heavily invest money into advertisement
to attract new customers or entice their competitors' clients. There is no doubt that those brokers
provide quality services and safety.
However, what if there are lower-cost trusted companies available? In fact, with just little
research, you'll be surprised to discover such options.
A less-advertised brokerage doesn't necessarily equal less safety or lower quality services.
Let's take a look at TradeKing that has been around for over 15 years! It is one of the largest online
discount brokerage firms today and also a very strong competitor to the big-name brokers.
A beginner-friendly brokerage, Tradeking has been offering quality services and the lowest possible
commissions since its establishment. Known for its excellent customer service, this brokerage firm
offers great support and educational resources to its clients, both of which are important criteria
to consider when it comes to choosing a broker when you are just starting out with investing.
#3 Look For a Broker With No Hidden Straightforward Fees And Commissions
Before opening your first brokerage account, be sure to examine and understand all account fees
charged by a company. Commissions and fees are costs of investing with a high range, depending on
the broker. It is not a secret that commissions and fees charged by investment companies can
significantly decrease your profits and even totally eat them up. You can't avoid paying commissions,
but you can minimize the cost of investing by choosing a broker with a clear and straightforward fee
By choosing the right brokerage firm, you can either pick an account with no fees like annual or
maintenance fees for retirement accounts or may learn ways to avoid the inactivity fees or platform
fees charged by some brokers. Let's take a look at
Choicetrade. It charges a $30 quarterly inactivity
fee, but waives it with five or more trades per quarter. Pretty steep! On the contrary, although
TradeKing has a $50 inactivity fee per year, this can be easily avoided with only one trade every
Save with the offer: Get $500 in free
trade commission with a $500 minimum deposit. No hidden fees.
#4 Beginner-friendly Trading Platform And Extensive Educational Resources
As a new investor, it is very important for you to pick an online broker that offers a beginner-friendly
platform. The thing is investing can be intimidating in the first place and your first brokerage firm
is supposed to make that process easier for you. It's supposed to make you feel comfortable when
navigating through the platform and executing trades. The more comfortable you feel with the platform,
the more likely you will be driven to stay motivated and learn more about investing. On the other hand,
a feeling of being overwhelmed will most likely discourage you from learning about investing, and this
can potentialy affect your trading experience and hence your profits as well. TradeKing, TD Ameritrade
Investing are online discount brokers with the most beginner-friendly interfaces.
TD Ameritrade is very unique in its way. It is the only brokerage firm that offers all of its
three trading platforms for free to all customers. So, as a beginner investor, you can start with
its clean and pleasant web-based platform. As you progress with your trading skills, you can easily
switch to the broker's advanced, professional level, one of the best in the industry professional
level platforms, without the need to change a broker. What's more, TD Ameritrade offers excellent
well-organized educational resources – videos, articles and quizzes. The company will even encourage
you to come back and learn more by giving you rewards for covering a topic. You cannot even
realize it, but the broker's reward approach is a very strong psychological motivator for you
to stick to a learning process and achieve your goals quicker. The best part is that
TD Ameritrade does not require a minimum deposit to open an account, so almost anyone can
open an account and take advantage of the company's educational material without any risk.
TradeKing offer: Get $500 in free
trade commission with a $500 minimum deposit. No hidden fees.
Not all brokerage firms can deliver the same level of service
to a new investor. Take your time to explore your opportunities wisely and pick out the brokerage firm
that offers good pricing, quality services and the tools needed to safely invest and grow your
Still not sure what brokerage firm to choose? Check out our list of