A Beginner’s Guide to Buying and Selling Stocks — Part 1
Don’t worry if you haven’t invested in stocks yet and are thinking about how to get started. We are here to advise you about buying and selling stocks. Before actually buying a stock, you need to find a suitable broker.
There are usually two different types of brokers that you can choose according to your budget and requirements — an online or discounted broker or a full-service provider broker.
Now, let’s dive a little deeper into what differentiates these two types of brokers:
Online or Discounted Broker
An online or discounted broker usually does not have an office and does not offer you investment advice or advice of any kind. It charges its fees based on transactions. You can trade with an online broker by opening a trading account with some money. Once you create it, you can log on to your broker’s website and buy and sell stocks from the comfort of your home.
Sounds straightforward! However, you need to be aware that you are trading on your own this way, as your broker will not offer you any advice. In this case, a certain amount of your knowledge about trading is essential for success.
Since online or discount brokers only take orders, they are less expensive than full-service brokers.
Full-Service-Broker
A full-service broker provides you with comprehensive advice on buying and selling stocks. It can also manage your entire portfolio based on your risk tolerance and distribute your set capital in diversified stocks. The focus is not on investment advice alone but also on tax issues, estate planning, and future retirement planning.
Most beginners, therefore, should begin their journey with a full-service broker. Once they gain experience and understand the mechanism of trading and investing in the stock market, they move to the online broker without taking an unpredictable risk right away.
The final decision on which broker it will be is up to you, as it depends on your needs and requirements. If you are willing to pay a premium amount to a broker to take care of your investment, you should go for a full-service broker. On the other hand, if you have little money and want to take the extra risk without professional guidance and advice, online or discount brokers are best for you.