When it comes to investing,there are decisions galore tobe made. Which stock shouldyou buy? How long should you hold it?Should you be in actively managed orindex funds—or both?
But the investment decisions don'tend there. For those doctors who practiceInternet investing, choosing anonline broker is a critical decision.According to Investopedia.com, thereare more than 100 companies offeringbrokerage services on the Internet. Thekey is selecting the right one for you.
For example, do you intend to make alot of trades, or are you more the buyand-hold type of investor? According toan article in , online brokerHarrisdirect.com charges a maintenancefee of $15 per quarter if you have lessthan $10,000 in assets. QuickandReilly.comcharges $25 per quarter for accountsthat are under $25,000.
Investopedia.com suggests that youutilize a full-service broker, particularly ifyou are not an experienced investor.With a discount broker, you're likely toget what you pay for, such as less service.That's acceptable as you become a moreexperienced and confident investor.Initially, however, some handholdingmight be just what you're looking for.
If there's an online broker you're considering,you might want to visit thecompany's Web site at different times ofthe day, particularly during peak tradinghours. What you'll want to check is howfast the site loads, as well as some of itslinks, to make certain there are no technicaldifficulties. You'll also want tocheck what other trading options theonline broker offers. Realistically, it maynot always be convenient to get to acomputer. Investopedia.com suggestschecking into the availability of touchtonetelephone trades, fax ordering, oreven talking to a broker over the phone.And while you're at it, check the pricesof these options as well.
While we're on the subject of price,don't open an account with an online brokerjust because they've advertised thelowest commission cost. The broker mightalso offer the least amount of services. Orthe advertised rate might only entitle youto certain services, with higher fees forservices like limit orders and options.
MSMoney.com suggests that youshould also be aware of hidden costs. Forexample, an online broker might onlycharge $8 per trade, but it's important toread the fine print. Some brokers imposeadditional fees for the delivery of stockcertificates, late payments, transfer fees,wire fees, IRA fees, annual maintenancefees, and termination fees. And even ifthose fees don't sound like a lot ofmoney, they can add up over time.
Consider an online broker's otherinvestment options. This could includeCDs, municipal bonds, futures, or evengold/silver certificates. Brokers alsooffer other financial services, such aschecking accounts and credit cards.Keep these options in mind when youare making a decision.
If you're not planning to be thatmuch of a trader but are looking to builda relationship with a broker that focusesmore on money management, thearticle suggests you considerAmerican Express, Merrill LynchDirect, or Smith-Barney Access.
What's the minimum initial depositthe online broker requires? Some companiesrequire that you deposit as muchas $10,000 at the start, while others onlyrequest $2500. Make sure you investigatethe details to avoid unexpected disappointments.