Good stock investments are a wealth-building mechanism; one can easily miss out on wealth growth opportunities by not investing. However, all stock investments are not a hundred percent safe, but if you invest your money wisely the potential gains can be huge. Money depreciates in value if it is not invested; whereas if you invest your money it will grow.

If you are new to investing in stocks it is important to choose an online stock broker who takes care of your investment trades, maintaining and updating your accounts. It is a known fact that there is no guarantee on investment returns, but a good broker can advise you to amplify returns on your investments.

Evaluate your needs

Your investment goals should define your investment curve, so before you start, make sure to take an honest introspection to evaluate your current financial situation. This will also help to determine whether you need a ‘Full Service Broker’ or a ‘Discount Broker’.

A Full-Service Broker will do the maximum routine work for you, along with offering advice and recommendations. The services of a full-service broker are not cheap. Whereas a Discount Broker only executes the trades on your behalf and leave the investment decisions on you. They also charge lower commissions.

The next step is to evaluate your needs and refine your investment goals; this can be done by answering the following questions-

  1. Would you be a passive investor or would you like to be an active full-time investor?
  2. What kind of assistance are you looking for? Will you need the help of support personnel? Will you be able to execute trades or will need the assistance of a broker?
  3. Are you aware of your financial goals?

Prepare a checklist for your requirements from an online broker

Now that you have refined your investment goals it’s time to evaluate the criteria for your brokerage services. Before selecting a broker check if they are members of Broker Regulation and Trust. These details are usually located on their website; in case such information is missing you can check the details by posting a query on the website.

Check to make sure that the CD’s, Money market deposit accounts are backed by a regulatory body, this will ensure the safety of your investments. Another crucial question to ask would be, is the brokerage firm adhering to Consumer Protection Rule to safeguard your investments?

Research for other customer reviews using keywords such as ‘fraud protection and customer service.’

Check details about your Online Brokerage Account Offerings

It is advisable to check this detail if you want to diversify your investments. Would it be possible for you to open a retirement account with the same brokerage firm? Is your broker providing the option of managed accounts for different investment goals?

It is always advisable to not be misled by lack of information, by looking for such details you are safeguarding your own interests.

Security and Account Protection

With so many online frauds taking place, investing can be a minefield for a beginner. Other than learning various financial instruments, you also have to be on guard against online scammers.

According to Financial Fraud Action, in the UK in 2016, £20m a day was lost to financial fraud with the elderly most at risk.”

Ensure that your broker’s website is offering a valid authentication. Are they giving the clients additional security options other than time-sensitive codes? Also, ensure that the broker does not sell customer information to third parties such as marketing firms.

What is your Stock Broker’s fee?

Check the small details like is there a fee associated with the opening of an account? Do they have a minimum cap at deposits? Are there any other account maintenance fees? If yes, is it charged monthly or annually?

Remember, to ask for details about trading commissions, as these depend on how much you have invested through the broker and the frequency of your investment. Also, check to see whether the commission rates vary with different securities.

Lastly, test your Broker’s Platform

Sometimes the best way to test the quality of the platform is by simply doing a test run. So do not hesitate to sign up for the account, having a clear picture is definitely worth the effort. You will get an idea of the services just by looking at their offerings and other details. Do not hesitate before asking for multiple quotes for stocks and then check each tab to see the data displayed.

Look for details like –

  • What are the various types of securities displayed?
  • Are the price quotes up-to-date?
  • Can you set up customized alerts?
  • How much control do you have over the timing and execution of a trade?

The above checklist will give you an honest evaluation on\f the services the broker is offering as there are a number of factors to consider before you pick a broker.

You can use our in-depth comprehensive guide to find an online stock broker to suit and serve all your needs.