4 facts to consider when choosing a brokerage firm for a new investor

When the time comes to start investing whether for wealth or retirement, a brokerage's services and its cost go a long way toward securing and growing your hard-earned money potentially. Your choice of a brokerage firm as a beginning investor makes a huge difference in the amount and quality of services you are going to receive as a client. What's even more important is that your choice of a broker determines the price of investing in the form of commissions and fees.

Look for a regulated, highly experienced and trusted broker

It is pretty obvious that you'll get a better service from a highly experienced trusted brokerage firm than from a company that is just starting out in the industry. The safest brokerage firm for new investors is a respected one with a long history in the business, which is also regulated by FINRA and SIPC. SIPC protects up to $500,000 against the loss of cash or securities, and FINRA regulates trading in equities, corporate bonds, securities futures and options. In other words, you can expect more from brokerage firms that are members of SIPC and FINRA since they provide an extra layer of protection and security to customers. All major U.S. brokerage firms are members of SIPC and FINRA.

Highly advertised vs. lesser-known brokers

Unfortunately, a majority of new investors are not even aware of all the possibilities available to them when it comes to opening a first brokerage account. If you take a look at the industry's top advertisers, it is likely that you'll notice just a few well-known companies with a big name and a long history such as Fidelity, Etrade, Schwab and others. Those companies heavily invest money into advertisement to attract new customers or entice their competitors' clients. There is no doubt that those brokers provide quality services and safety.

However, what if there are lower-cost trusted companies available? In fact, with just little research, you'll be surprised to discover such options.

A less-advertised brokerage doesn't necessarily equal less safety or lower quality services. Let's take a look at Ally Invest that has been around for over 15 years! It is one of the largest online discount brokerage firms today and also a very strong competitor to the big-name brokers. A beginner-friendly brokerage, Ally Invest has been offering quality services and the lowest possible commissions since its establishment. Known for its excellent customer service, this brokerage firm offers great support and educational resources to its clients, both of which are important criteria to consider when it comes to choosing a broker when you are just starting out with investing.

Look for a broker with no hidden straightforward fees and commissions

Before opening your first brokerage account, be sure to examine and understand all account fees charged by a company. Commissions and fees are costs of investing with a high range, depending on the broker. It is not a secret that commissions and fees charged by investment companies can significantly decrease your profits and even totally eat them up. You can't avoid paying commissions, but you can minimize the cost of investing by choosing a broker with a clear and straightforward fee schedule.

By choosing the right brokerage firm, you can either pick an account with no fees like annual or maintenance fees for retirement accounts or may learn ways to avoid the inactivity fees or platform fees charged by some brokers. Let's take a look at Choicetrade. It charges a $30 quarterly inactivity fee, but waives it with five or more trades per quarter. Pretty steep! Ally Invest has no inactivity fee.


Beginner-friendly trading platform and extensive educational resources

As a new investor, it is very important for you to pick an online broker that offers a beginner-friendly platform. The thing is investing can be intimidating in the first place and your first brokerage firm is supposed to make that process easier for you. It's supposed to make you feel comfortable when navigating through the platform and executing trades. The more comfortable you feel with the platform, the more likely you will be driven to stay motivated and learn more about investing.

On the other hand, a feeling of being overwhelmed will most likely discourage you from learning about investing, and this can potentialy affect your trading experience and hence your profits as well. Ally Invest and TD Ameritrade are online discount brokers with the most beginner-friendly interfaces.

TD Ameritrade Official Website TD Ameritrade is very unique in its way. It is the only brokerage firm that offers all of its three trading platforms for free to all customers. So, as a beginner investor, you can start with its clean and pleasant web-based platform. As you progress with your trading skills, you can easily switch to the broker's advanced, professional level, one of the best in the industry professional level platforms, without the need to change a broker.

What's more, TD Ameritrade offers excellent well-organized educational resources – videos, articles and quizzes. The company will even encourage you to come back and learn more by giving you rewards for covering a topic. You cannot even realize it, but the broker's reward approach is a very strong psychological motivator for you to stick to a learning process and achieve your goals quicker. The best part is that TD Ameritrade does not require a minimum deposit to open an account, so almost anyone can open an account and take advantage of the company's educational material without any risk.

Final word

Not all brokerage firms can deliver the same level of service to a new investor. Take your time to explore your opportunities wisely and pick out the brokerage firm that offers good pricing, quality services and the tools needed to safely invest and grow your hard-earned money.

Choosing a Brokerage Firm
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