If you are just starting out on your own as an adult, or if you are approaching the age of retirement, you are probably thinking about where you stand financially and what your financial future will be like. It is time to stop thinking and start actually planning and taking action.
Investing can be a real mystery for the average person. The first step that you are going to want to take when building up your portfolio is to make sure that you have a brokerage account; so open one up if you do not already have one. The purpose of these accounts is to make it possible for you to buy bonds, stocks, mutual funds and other types of investments. You are basically allowed to pay professionals to purchase or sell whatever items you ask them to. The fee that you pay to these individuals is known as a commission, and a commission can range from between $5 and $10 dollars to $100 or more depending on the broker.
The biggest difference is the price is going to come from choosing between a discount broker or a traditional broker. Traditional brokers tend to be capable of providing a much larger range of financial services, and their price tag matches this. They serve in the same way as professional money managers, and they are capable of offering advice for what type of investments will best suit your needs.
Discount brokerage companies, on the other hand, are companies tailoring to self-directed investors, because they do not offer any specific advice regarding where you should put your money. What this does is leaves you to make your own personal financial decisions, but in return, you end up saving money in comparison to traditional brokerages. There are a number of brokerage firms that offer both services, such as Merrill Lynch and Charles Schwab for example. What this means is that customers are able to choose between discount and traditional formats.
When you open a new account, the minimum amount of your investment can vary from $500 to $1000 for most investments, and even less if you are investing in an education account, a retirement account or an IRA account. Most of these options allow you to have an application form sent directly to you, or you can fill the application form out online, printing it out and mailing it with a check for the investment amount. This is a simple and straight forward process that can be completed quickly from nearly any financial institution. Among the best in the realm of discount brokers for investing are Ameritrade, E-Trade, TD Waterhouse, Suretrade, Quick & Reilly and Datek Online. Each asks for a commission of between $8 and $30 and have websites that are relatively easy to navigate. Almost all of these companies allow you to invest in common stocks as well as mutual funds, which is a great plus if you are trying to manage your own personal finances.