Trading Stocks Online vs. Using a Personal Broker: Which is Better?
Getting involved with the stock market can be good if you want to make some extra money or even to start a career. There are two traditional ways to get involved: using a personal broker or trading stocks online. It can be hard to decide between the two, but here is a breakdown to help you decide which would be better based on your investment style.
When you’re trading stocks online, you have full control of what you’re doing. You have complete authority over your portfolio and what goes into it. Trades can be executed immediately without having to gain approval from another party. Unfortunately, this means you may also have limited access to certain stocks. If you hire a personal broker, he or she may have access to shares that are not available to the general public. Third parties often inform dealers that stocks are available, and then shares are offered to you through your broker. While you still have a degree of control, it’s a much more guided approach, which is great if you don’t know much about the stock market.
Online trading offers you a variety of stocks to choose from, and you’ll also have a wide array of tools you can use to research the companies. Some firms offer research with no additional charge. Because you’re behind the computer, it’s up to you to decide whether the shares are a sound investment. You do have control, but this control can go wrong, and you may end up investing in something that isn’t profitable.
Personal brokers do all the research for you and can save you a significant amount of time. Additionally, these financial professionals can prevent you from investing in something that isn’t beneficial. It can be a better way to spend your money if you’re inexperienced with the stock market. Personal brokers also bring a certain amount of knowledge, which can help avoid scams.
Trading stocks are not free. When you are part of an online firm to trade stocks, you must pay a fee to use the services. The charges vary depending on the company you choose to use. On the other hand, personal brokers are much more expensive. On top of charging fees per transaction, many take a percentage based on your overall profit. While the costs may seem excessive, you’re paying for the knowledge and time the broker has gained throughout the years. This tradeoff can be a sound investment if you aren’t knowledgeable in stock market trading.
Based on this breakdown, it becomes apparent that each of these trading options have their own benefits and drawbacks. Trading stocks online is a way to make extra money, especially if you already have a little bit of experience in trading. However, if you aren’t sure what you’re doing, it may be best to hire a stockbroker. While the fees may seem like a lot, stock brokers bank on being successful since commission from stocks is such a large part of their payment strategy. If you’re looking to gain access to third-party assets that may not be available to you, a stockbroker is also an excellent choice. It all depends on your investing style.