Want to Start Investing, Do You Need a Broker?

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We are all becoming very aware of the need to start investing in our own financial futures. We realize that just putting our money in bank saving accounts isn’t going to be enough. Social Security won’t provide the income we will need after we retire. It is now incumbent upon each individual to put their money to work and to start investing today! So you know you need to invest, but do you really need a broker or can you go it alone?

What is a broker? A broker is a person or a firm that handles your transactions, investments for you. In the past if you wanted to invest in stocks you would have to hire a broker or take the initiative to get your own broker’s license. You would literally hand over your money to the broker (or brokerage firm) and they would pick and choose where to invest your money. They would not have to consult you before making a new investment with your money. You simply trusted them to have the knowledge and ability to make your money grow! You always went with firms that had a strong reputation for making money! You would pay hefty fees for these services, which led to the advent of discount brokers.

Discount brokers handle the transactions for you, but make no recommendations and will not make any investment without consulting you first. The fees are much lower, hence the term Discount Broker and the service level is less inclusive.

In today’s world you can still find full service brokers, but with the advent of technology, discount brokers are much more common. You can do all of your investing from the comfort of your home on your personal computer today. People are much more educated on the research required prior to investing and the ease of the internet has made the process much less a mystery.

However, even investing online does require the use of a broker. There are literally tons of discount brokers online, you see them advertised everywhere! Companies like Share Builder and E*Trade and Ameritrade have made online investment easy for everyone! The fees are much less than going to a traditional full service broker and the transaction fees vary from company to company. More and more brokers are setting up shop online as the popularity of investing online increases.

You really should read all of the details when joining any of these discount brokerage firms online or in person. There are often times fees that you would typically be unaware of if you don’t read the terms carefully. For example, some brokers charge an inactivity fee. Meaning if you open an account and do nothing with it for a certain period of time, you will be charged! Make sure you have a thorough understanding of transaction fees, commissions and any other fee the company you choose has on record.

You do need a broker if you want to get involved in stock purchasing or trading. If you simply want to buy bonds, you can do that on your own. Either way, investing is a must these days. If you want a secure financial future, you simply must start putting your money to work for you!