When buying a stock, you purchase a fractional ownership of the company which issues the security and have some certain rights. These include receiving dividends if sufficient earnings have been generated and can potentially sell them to gain a profit. You could buy individual shares or a mutual fund which makes you a shareholder.
Being among the shareholders gives you claim in some parts of the earnings and assets that the corporation has, essentially making them one of its owners. You may be wondering where to go to buy stocks so you can start investing your money this way. There are two ways of doing this which depends on your preference.
First is through using online brokerages with the cost being based on every transaction or share which lets you open an account with comparatively little money. These are easier to use just like opening bank accounts where you sign up for one then transfer funds to it. After this is done, you may place an order on the stocks you want or among the results when you searched for a suitable one.
Second is with traditional stockbrokers, also known as full service brokers who takes their time to get to know you financially and personally. They check different factors related to you like your lifestyle, personality, marital status, age, income, assets, risk tolerance, debts and others. They would then be developing a financial plan suitable for your investment objectives and goals.
And they can assist also with any kind of financial advice like budgeting, retirement planning, tax advice and estate planning. They could help in managing all your finances now until the last days you need them to do this type of service. These brokers are perfect for those who prefer to have in one package everything they require.
Their fees are usually more expensive compared to discount brokers though the value they give as a professional financial advisor is worth it. So if you are able to afford their charges then choosing to have them is better. Setting up an account with them normally needs you to have at least one thousand dollars to start investing in stocks.
Money managers are similar to financial advisors but might take full discretion on the account of their client. These investment professionals are highly skilled and normally handle large portfolios which is why they charge sizable management fees. They based this on those assets that are under them and not for every transaction.
When opening a brokerage account, specially when you choose the first method, you should consider several things. Determine the amount of money you have and check what is their minimum requirement that allows you to open one. Find out how much support you need and if they could provide this to you.
This support may include investment guidance, educational tools and research papers or articles about stock trading. Determine how much stock trading commission they require with the lower ones beneficial for frequent trader. Avoid those with inactivity fees if you will be trading infrequently like placing less than ten trades in a month.
Categories: Business and Management