Best Online Stock Brokers For Beginners in 2021
After the crash of 2008 many companies were on the brink of collapsing, the price of Gold hit historical highs and the stock markets went down to historical lows. Many investors liquidated their accounts from traditional share investments and instead chose to save or invest in safe havens like Gold.
Almost a decade on the picture has changed, continuous all-time highs in most major Indexes, with investors being excited by a new breed of companies going public, especially in the tech sector. This has created a huge demand for ownership and in turn huge competition among brokers of these stocks.
Best Stock Brokers
So what is the job of a Stock Broker? Who are the best ones for investors to use? We detail all you need to know below.
What is a Stock Broker?
A stock broker acts as a middleman between the stock exchange and a private investor. Stock brokers provide individuals with the opportunity to buy shares within a respective public company that is listed on the stock exchange.
This service is done for a fee or commission that the broker charges the individual for conducting the transaction on their behalf. Depending on the stock you would want to purchase, it is necessary to have a broker which offers you access to the exchange on which they are listed.
Most brokers would grant you access to exchanges listed on their domestic exchanges. For example, a US stoc kbroker may give you access to US exchanges, S&P500, DOW JONES, NASDAQ etc. A good online broker will be well connected with global share exchanges, allowing you to invest in companies beyond your own country.
Is stock trading for me?
This question can be answered quite simply, but first, you need to answer this. Are you looking for long term or short term returns?
If you are looking for short term returns then maybe day trading CFDs would suit you better. If you are more conservative and interested in longer-term gains then stock trading is indeed for you.
However, in choosing stock trading, you will likely need a larger brokerage account size than you would if trading CFDs.
Pros and Cons of a Stock Broker
Pros:
- Gives you access to various markets
- No need to contact each individual company you want to buy shares in
- Well regulated – the safety of funds
Cons:
- Commissions can be high
- Can usually not hedge (buy/sell simultaneously)
FAQ’s
How will I know if I am due to dividend payments?
Your stock broker should give you an e-dividends calendar to show when dividends are due for a particular share.
Are commissions and other fees similar to the same for each share?
Commissions usually vary on the volume you will be buying, rather than the share price of the company.
Can the stock broker recommend shares to invest in?
It depends on the type of broker. Some will offer you an advisory service and others will only offer you trade execution services.
Is there an overnight fee?
Most stock brokers will charge an overnight interest, as they must pay the exchange a holding fee for each day they have a position open.