5 Things to Look For in an Online Brokerage Account
A brokerage account is an online service where you have the ability to buy and sell stocks, bonds, options, and mutual funds. When you start learning how to make money with stocks, you have to determine where you want to open your account for trading or investing. Let's take a look at 5 features you should be looking for when opening your first account for trading or investing.
1. Commissions and fees
Commissions are the fees charged for opening and maintaining the account, and for buying and selling the specific investment product you are interested in. If you are starting with a smaller account you don't want an account that has high commissions and fees because they will eat into your profits as you are investing.
2. Investment selection or products
Brokerage accounts can offer a range of investment products like stocks, options, and mutual funds. But, it's important to know that some mobile investment platforms like Acorns, Stash or Robinhood may offer stocks but only a certain selection of stocks. Or they may only offer the ability to invest in mutual funds. So if you know you will want to buy and sell a large selections of stocks, or if you know you will want to trade options, make sure it is offered before signing up.
3. Minimum balance requirements
Some brokerage services may have a requirement of opening an account with $100, $1,000, or even a $10,000 minimum. If you are wanting to start with a small amount of money then a minimum requirement might be an issue with some services. So, you want to check to see if there is a minimum requirement. There are some brokerage services that have no minimum requirement. You can open an account with zero down. My favorite brokerage services that do not require a minimum balance are TradeKing and Optionshouse.
4. Tools and technology
Whether you want to really analyze a stock or simply invest on the go, you're going to want to see what tools and technology the brokerage service has to offer. Do they offer you charts? Do they offer a way to scan for stocks in a certain price range? Any type of tools that will help you with your trading and investing.
5. Customer service
To me great customer service is hands down the most important. I need for a brokerage service to be able to answer my questions and be knowledge about their own platform. So for me it's very important that customer service be top notch.
When was the last time you went somewhere and they we rude? Did you go back? Did you complain?
Chances are you decided that you weren't going back there again. If the customer service is not up to par or if they are not trying to improve the customer experience, I’m taking my money elsewhere! Even if that means that I have to pay just a little bit more somewhere else. I want to be able to get the support that I need if I’m having issues with the platform. I am willing to pay a little bit more if it means that I am going to get the customer experience and support that I need when I’m trading and investing.
Great customer services is one of the things that has kept me at Optionshouse for so long. Any time I have an issue, they are quick to fix it or provide support and offer me commission free trades for my trouble.
Something that I have done is pieced together a selection of online services that fit what I need. I have accounts at multiple online brokerage services. The reason I did this is because of fees, minimum balances requirements, and tools. I wanted certain features and certain brokerage services had them. So, I have accounts at Optionshouse, TradeKing, and TDAmeritrade. What I love about Optionshouse is that they have low fees, they were the first account I opened. I started there solely because they had the lowest fees at the time. I do believe that they continue to have one of the lowest fees in the industry.
I was just learning and I knew that I was going to be buying and selling often and I didn’t want the fees to eat into my profits. Then, I became better with reading charts and I wanted more tools. TDAmeritrade has the charting tools that I love. I love their thinkorswim chart platform. TDAmeritrade has higher fees but I'm okay with the fee being higher than Optionshouse because I am willing to pay a little more for the tools they provide. The plus side is I can use the same charting platform for stocks I'm looking at in my Optionshouse account.
As your knowledge as a trader and investor increases you may find that you might want to move your account or open multiple accounts to meet your needs.
Join The Exchange to get access to my 7 day free course and weekly tips about trading the stock market straight to your inbox!