If you are planning on investing in the stock market, you will need a broker to make the transactions for you. You can't buy or sell stocks on the stock market directly yourself, you have to go through a broker. Generally, brokers work for a brokerage house, and before you can hire one you need to decide what you want them to do, as different brokers handle different kinds of investments.
Stockbrokers are required to pass two different tests in order to obtain their license. These tests are very difficult, and most brokers have a background in business or finance, with a Bachelors or Masters Degree.
There is a substantial difference between a stock analyst, and a stock broker. The job of a stock broker is not to make predictions, just to buy and sell the stocks that you tell them to. An analyst, on the other hand, is responsible for watching how the stock market performs and predicting which stocks will do well - in a word, analysing.
Brokers earn their money from commissions on sales in most cases. When you instruct your broker to buy or sell a stock, they earn a set percentage of the transaction. Many brokers charge a flat ‘per transaction’ fee.
Full service brokers do sometimes give advise, along with other services that discount brokers might not offer you. If you know what you're doing, finding someone who can act as both broker and analyst for you can be very helpful - although you do need to be confident enough to sort the good brokers from the bad, and find someone reliable.
Cheaper brokers don't advise you; they just do what you tell them, unlike full service brokers. They are often not qualified to do more - there are legal restrictions on what financial services can be offered by who,
So before you can start investing, the first and most important decision you need, is to decide what kind of broker you are going to ask to handle your investments. This can be a significant decision, as there is often a fee if you want to change brokers later.
If this is your first investment, your best bet is most likely to go with a full service broker, who can give you suggestions as to what to do or not do. If you have more experience however, it may well be wiser to hire a discount broker, and find someone else to offer advise or analysis. It's hard enough being good at one job, never mind two, and you might not want a full service broker trying to convince you to do something you disagree with!
Stockbrokers are required to pass two different tests in order to obtain their license. These tests are very difficult, and most brokers have a background in business or finance, with a Bachelors or Masters Degree.
There is a substantial difference between a stock analyst, and a stock broker. The job of a stock broker is not to make predictions, just to buy and sell the stocks that you tell them to. An analyst, on the other hand, is responsible for watching how the stock market performs and predicting which stocks will do well - in a word, analysing.
Brokers earn their money from commissions on sales in most cases. When you instruct your broker to buy or sell a stock, they earn a set percentage of the transaction. Many brokers charge a flat ‘per transaction’ fee.
Full service brokers do sometimes give advise, along with other services that discount brokers might not offer you. If you know what you're doing, finding someone who can act as both broker and analyst for you can be very helpful - although you do need to be confident enough to sort the good brokers from the bad, and find someone reliable.
Cheaper brokers don't advise you; they just do what you tell them, unlike full service brokers. They are often not qualified to do more - there are legal restrictions on what financial services can be offered by who,
So before you can start investing, the first and most important decision you need, is to decide what kind of broker you are going to ask to handle your investments. This can be a significant decision, as there is often a fee if you want to change brokers later.
If this is your first investment, your best bet is most likely to go with a full service broker, who can give you suggestions as to what to do or not do. If you have more experience however, it may well be wiser to hire a discount broker, and find someone else to offer advise or analysis. It's hard enough being good at one job, never mind two, and you might not want a full service broker trying to convince you to do something you disagree with!
About the Author:
This article written by Stephen Hauptman, expert trader of many years experience. If you're looking for the best stock to invest in, you could do worse then check out his site - click here for the Stock Signalller
