Getting Started with Discount Brokers

Investing is a smart financial move if it's done correctly. If you're just starting out and don't have a lot of cash to pay in fees, then discount brokers may be a good idea for you. What are discount brokers? They're brokers who can help you invest, but they don't actually take you by the hand and guide you through every little decision. Normal brokers would. But with discount brokers, this is how they're able to charge significantly less. If you're new to investing, you should already have a good understanding of the fees and the way things work before you actually get started. There are a couple of basic fees that every investor needs to know about, no matter what kind of broker you decide to use. They're in addition to actual trading fees.

Minimums When you start looking at brokers, both regular and discount brokers, you'll find that there is normally a minimum balance required to open an account. It could be as little as $500 or up to around $1,000 if you're going to use a discount broker. Expect that number to be significantly higher for a normal broker.

Withdraw You may not be able to take money out of your account if doing so will make your account drop below the minimum balance. This can get tricky. Yes, it's your money. But sometimes it isn't as easy as you may think to get your hands on it. There are some accounts that will give you the freedom to write check from them. These accounts normally will carry with it a requirement for a higher minimum balance. So make sure you know what you're getting into and any fees/regulations for taking money out of your account.

There is no magic broker that's cookie-cutter perfect for everyone. That being said, you should know what kind of investor you are before choosing the broker you want to handle your affairs. Are you a tader or a keeper? A trader likes to buy temporarily and then sell, sell, sell. If you're a trader, then you're looking for the quick return on your money and you'll likely be doing a lot of transactions in short periods of time.

If you are indeed brand new to investing, it's usually a better bet to be a keeper. There's less risk. A keeper gets ahold of good stocks and keeps 'em. If you're a keeper then you're looking to see a nice return on your money over time.