Three questions to ask yourself before you open an account with a stockbroker

Julie Brownlee, Fsp Invest, 12 Feb. 2014

Tags: stock broker, broker, stockbroker, investing, opening an account with a stockbroker, investor, trading, phone, online, shares, stocks, account, charge, fees, costs, execution-only,



If you want to invest, you need to open an account with a stockbroker. A stockbroker’s job is to buy and sell shares for you. Once you buy shares, they’ll look after them for you. But before you jump in, you need to consider a few things first. Read on to uncover what you need to decide before you open an account with a broker…



If you’re going to make all your investment decisions, then you need an execution-only broker, Phil Oakley in Money Week explains…

With this type of broker, you give them an instruction and they ‘execute’ it for you.

So before jumping in, ask yourself the following questions to ensure you open an account that fits your needs…

#1: Do you want to deal with your broker over the phone or online?

It’s becoming more and more popular to trade online. It works out cheaper for you, and the broker. And you can access a wealth of information on your broker’s site.

Even if you fancy doing everything online, it’s good to have an option of picking up the phone too. It means if you need a hand with a trade or want to check something, you have the option.

#2: How much is the stockbroker going to charge you?

There are fees and charges when you buy and when you sell. But you may find that doing it online is cheaper. Compare fees with different brokers to see what you get for your money.

Think about how much you’re likely to trade too. If you don’t trade much, your broker may charge you an inactivity fee. So make sure you check that out too. There may also be monthly, quarterly or annual charges payable.

#3: How will you broker hold your shares?

Most brokers hold your shares in a nominee account. This just makes the process easier for the broker.

But don’t worry, if the worst should happen and your broker goes bust, your shares are safe. Just ensure they’re a member of the JSE. You can check the JSE’s member list here.

If you don’t want your shares held in this way, find out if a broker you’re interested in offers a certified share dealing service. But, you will probably pay more for this.

So there you have it, three questions to ask yourself before you open an account with a stockbroker.


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