Thinking of opening a stock broking account? You may be spoilt for choice, yet, finding a broker who suits your needs can be quite a challenge . Here is a low down on how to zero-in on the right broker.
Identify your investment style first
To best understand your investment style, answer the following questions:
Are you an investor or a trader?
If you are a trader, do you want your orders to be executed speedily and efficiently?
If you are an investor, how long do you plan to hold on to your investments?
Do you need personal advice on your investment, or are you comfortable doing your own research?
Do you travel a lot? If yes, would you be in a position to monitor your investments?
Are you net-savvy? If not, are you open to using an online trading account?
Prioritise. For instance, if you are a trader, market gossip, fast execution of orders and interaction with other traders would be crucial. In such a case, offline brokers that provide opportunity to interact with dealers and other traders may help. But if you are an investor, you may place a higher weight on stock research. In such a case, you will have to look out for brokerages that offer high-quality investment advice. In that again, Iif you have access to the internet during the day, you can consider an online broking platform.
List your expectations next
Find out from friends and relatives about their brokers and use their experiences to arrive at a list of prospective brokers. Next, jot down what you would expect from your future broker. You can answer these questions to begin with:
Do you need a typical offline or an online broking account?
In case of an online account, does it offer a click-n-brick model? Beginners might find online firms offering personalised advices more useful.
Do you also plan to invest in MFs and IPOs? If yes, find out if the broker has a facility to buy/sell MFs of fund houses that interest you.
Most brokers charge an account-opening fee. Compare charges and eliminate a few brokers from the list.
Get details on brokerages/commissions charged . Here, understand that cheap is not always the best. Some firms charge higher for their value-added services. Give appropriate weight to the services vis-à-vis commissions charged based on requirements.
Making the choice
Finally, contact the brokers left on your list and meet their sales personnel. Clarify any and all doubts; do not hesitate to ask questions. It will help you get a better picture about the broker.
The last step is to zero-in on a broker who fulfils most of your requirements. For instanceif you are a trader who likes to be on his own, an online account with hi-tech trading software can be considered. Beginners may place more priority on customer service and research inputs .
Remember always to go with a broker who is well-established and carries a good track record. The process may take a while , but remember it is your money. Always better off safe than sorry!
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