If you started your investment journey with a simple app, it might be time to explore more comprehensive options for building a long-term portfolio.
This year, many individuals who had never engaged in stock trading became active investors. With stock prices reaching a decade low, it created an ideal environment for setting up accounts. Discount brokers experienced a remarkable 170% increase in new account openings compared to the same quarter last year.
6 Features to Evaluate in a Brokerage Account
Investing is a long-term commitment, with the goal of buying into companies you believe will grow over time. If you plan to continue purchasing stocks, mutual funds, or ETFs independently, consider these essential brokerage account features:
1. Education, Research, and Management Tools
While numerous online resources are available for stock research, a basic brokerage may not be enough if you seek deeper insights. Look for platforms that offer educational content, portfolio management tools, and comprehensive research from various sources, all often at no cost.
High-quality brokers will have integrated tools like tutorials and stock screeners, enhancing your investing experience.
2. User-Friendly Platform
Everyone has their preferences when it comes to navigating a broker's website or app. Although placing trades is generally easy, consider how intuitive it is to locate other tools and resources. Are there tutorials available? Is the dashboard user-friendly and customizable?
Think about your preferred method of trading—whether on a laptop, phone, or tablet—and ensure the broker's mobile app is compatible with your device, checking for any limitations on certain trades.
3. Low or No Trading Fees and Account Charges
Trading commissions have significantly decreased, and most established brokers, such as Charles Schwab and E-Trade, offer $0 stock trades with no minimum deposit required. This includes platforms like Robinhood and Ally Invest.
However, keep in mind that mutual fund commissions can range from $20 to $50 per trade. Many brokers waive these fees for their customers. Also, be aware of broker-assisted trade fees, which typically start around $25.
Most brokers have eliminated account fees, but review the fee schedule for any potential charges related to account maintenance or premium services.
4. Diverse Investment Options
While you may initially be interested in trading a specific stock, consider whether you might want to expand your portfolio with ETFs or mutual funds. Check if the broker provides access to a variety of investment types.
Most brokers offer ETFs, which trade like stocks, but availability of mutual funds may vary.
5. Dependable Customer Support
Effective customer service can significantly influence your investing experience. Does the broker provide a thorough FAQ? Is it easy to reach a representative for assistance?
Explore the customer support options available—some brokers offer real-time online chat, phone support, or email assistance. Testing the response time can give you a sense of their service quality before you commit.
Lastly, ensure it's straightforward to close your account and transfer your funds if needed, without incurring unnecessary fees.
6. Potential for Growth
You might start with a basic trading account, but consider the future. Are you planning to roll over a 401(k) or consolidate multiple IRAs? Many well-known brokers offer managed accounts tailored to your timeline and risk tolerance.
Bottom Line: Understand Your Needs
Just like selecting investments, establishing clear expectations can enhance your long-term relationship with your brokerage. Know your investment goals and service requirements to narrow down your options effectively.
If your initial choice doesn't meet your expectations, transferring to another brokerage is a straightforward process. The more you reflect on your needs upfront, the better your chances of finding a brokerage that aligns with your financial goals.
