How does the stockbroker thing works?
I thought about putting my money in stocks. But then if figured there is LOOOONNNNNNGGGG way in order to have good idea in the stock market.
So i figured it will be smart to give it to someone that this is profession to do it for me – Stockbroker. I Know i will be getting less but i will still be getting something. If i make money He makes money.
So the questions here is this:
Is this realy working like that? does he take commision? if yes how much on avarage? If no, how do I pay him?
Or just explain me how this thing works with stock broker.
Thank you!
Tags: Stockbroker, thing..., Works
June 2nd, 2010 at 7:08 am
Yes, his pay comes out of your initial investment. Brokers are so unnecessary. You can get the same service through mutual funds with no loads. With expense ratios under 1%, that is far less than the typical 15% a broker will charge. Instant diversification, professional management (for a lot less), and low fees. Yes, professional management is better than doing it alone, but mutual funds will do much better, especially when it comes to fees.
June 2nd, 2010 at 7:51 am
Yes, they work on commission. You pay it every time you buy or sell a security.
However, you need to select carefully. A reputable stockbroker can work wonders for you. However, every industry has a few unscrupulous people. A bad broker can cost you money by putting you into unsuitable investments or by making unnecessary trades to boost commissions. (That happened to a relative of mine.) Don’t just pick one out of a phone book. Ask your friends and business acquaintenances who they use, whether they’re satisfied, and why. Check with the National Association of Securities Dealers to make sure that your chosen broker is properly registered and has not been disciplined.
P.S. I disagree with the person who says that mutual funds always do better. They sometimes do better and they are a good choice for many people. However, a good stock picker can beat them. I invest in individual stocks and my portfolio routinely beats both the S&P 500 and my mutual funds. I also disagree that the average cost of a stockbroker is 15%. That may be true for a small purchase, but it is not true for larger ones.