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How to pick a stockbroker in four easy steps

by , 13 August 2014

Without a stockbroker, you can't buy or sell shares. A stockbroker acts as the go between you and the stock exchange.

So if you don't have an account with a stockbroker, how do you go about picking one?

Read on to find out…

Step #1: Decide how you want to trade

You need to decide how you want to trade with your stockbroker. Do you want to do it all online? Or do you want the convenience of picking up the phone and speaking to a stockbroker directly?

It’s usually a good idea to have a stockbroker that gives you the option of dealing both ways. Then if you need some help with an aspect of your trade or you have a question, you can pick up the phone.

Generally, dealing over the phone is more expensive than dealing online.

Step #2: What does the stockbroker charge?

Before you look at costs, work out how often you’re going to trade. You can look for a deal that suits you best.

Add up the management and admin fees as well as how much the broker charges per trade. Don’t forget you also need to pay for selling your shares.

But, cheaper doesn’t necessarily mean a better service. So make sure you weigh up what’s included in your account.

Step #3: What to do you want to invest and trade in?

Before opening an account, make sure the broker offers what you want to invest and trade in.

For example, if you plan to start investing in shares with the view to starting trading single stock futures at some stage in the future, ensure the broker offers these services too.

Step #4: Decide how much you’re going to invest

Some brokers only deal with high net worth individuals, whereas others will deal with investors with smaller sums to invest.

You need to make sure your broker is happy dealing with the size of your investing pot before you open an account.

Once you’ve sorted out these four main points, it’s a case of finding a stockbroker. You’ll find a list of stockbrokers on the Johannesburg Stock Exchange’s website.

So there you have it, how to pick a stockbroker in four easy steps.

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How to pick a stockbroker in four easy steps
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