Which broker model should you choose?
To buy or sell shares you have to go through a broker. There are two main types of stockbrokers; full service brokers and online 'execution only' brokers.
Your needs will be the most important consideration when choosing a broking model. As your experience grows, your needs may change and you may decide to change broking models or brokers in the future
Ask yourself the following questions to determine which broker and model might be right for you:
- How much money do you want to invest? If you only have a small amount then it may not be worthwhile paying a full service broker, so consider how brokerage fees will affect your investment outcomes.
- How much do you know about investing? Do you need access to research or advice on which shares to buy?
- How much control do you want over your investments? Do you want to have full control or do you want someone else to do the buying or selling for you?
- Will you be trading intraday, end of day or weekly and will you need access to live data or will 20 minute delayed data be ok?
- How often will you likely to be trading? More frequent traders can access sophisticated trading platforms for free; otherwise you may have to pay ongoing monthly fees for advanced access.
- Will you want to trade direct international shares and contracts for difference (CFDs) as well as Australian shares and will you need access to currency exchange?
- Do you want to use conditional and linked orders?
- Are you comfortable using the internet or do you need help placing orders? Most online brokers will help you to become familiar with their platform and provide over the phone advice on how to place an order.
- How much contact do you want and what type of reports will you need?