Choose your stockbroker with the same care that you would choose other professionals- for example a vet for your precious Shitzu. Your stockbroker should be someone who will listen attentively as you explain your financial needs and who can be trusted to carry out your wishes.
Easy to talk to
You should feel comfortable with your stockbroker. The more he or she knows about your financial situation and goals, the better your account will be served.
No pressures
You need to keep in mind that your investments must please you, not just your stockbroker. A good broker-dealer will take the time to find the investment strategy that is best for you and wont put you into a certain investment just because it’s the hottest item of the week.
Pays attention and acts on what you say
If you tell a stockbroker that you don’t want a certain degree of risk or a certain type of investment, then he or she won’t be constantly recommending that investment to you. On the other hand, a good stockbroker will try to find out why you don’t want a particular investment.
Explains things until you understand
The securities business is very complicated and can be difficult to understand, especially if things aren’t explained properly. A good stockbroker will provide you with information and will take as much time as necessary to explain a proposed transaction until you understand. Remember that this is your investment-you have every right to understand exactly what is going to happen with it.
And after you’ve chosen your stockbroker,
remember these things:
What do you need?
Determine how much and what type of service you want from your brokerage firm and stockbroker. A full-service firm will offer investment advice, make recommendations and offer research support.
Research your brokerage firm and stockbroker
Ask for and check references from several clients. Don’t make a decision based solely on a telephone solicitation, advertisement or seminar. Also, your stockbroker should have a license from the Securities and Exchange Commission.
Ask about fees and commissions
Most stockbrokers earn commissions when they buy and sell investments on behalf of their clients. Make sure you understand these costs before opening an account. Many brokerage firms charge ongoing fees related to the maintenance of your account. Try to understand these fees and how they are charged to your account.
Determine your investment needs and objectives (short-term profits, long-term growth, steady income, etc.)
Make your goals clear to your stockbroker, preferably in writing. If your investment goals change, be sure that your stockbroker’s records and your records accurately reflect your revised objectives.
Establish your tolerance for risk
Specify the level of risk you are willing to take to achieve your financial objectives. Remember a basic investment rule: the higher the possible rate of return, the greater the risk. If you are promised spectacular returns, be skeptical and ask questions.
Make sure you can understand account statements and confirmation slips
Understanding your account statements and confirmation slips is key to controlling your investments. Check the statements over carefully as soon as you receive them. Familiarize yourself with the format, terms and codes used by your brokerage firm. If you ever find information in your account statement or confirmation slip that you do not understand, contact your stockbroker immediately and get a satisfactory explanation.
Penny stocks are common shares of small companies that trade at less than $1.00. In some countries, similar shares of stock are known as cent stocks.
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