What are brokers ? And what can they do for you?
A broker is the English term for the understanding of stock trader and can be either in securities, goods or commodities. The term broker is most commonly used when a stockbroker is meant and is an intermediary that facilitates trading. If you want to invest as an individual and be active on the stock market, you will need a broker.
A broker: what is it exactly?
So a broker is actually a stock trader and is a company that enables trading in stocks, currencies and commodities. One of the best examples of a broker is your bank. Almost all major banks in the Netherlands make it possible to invest, buy and sell in shares and other products. However, investing at banks can often be very expensive, so there are also more and more online brokers that focus on private individuals. They often offer lower prices and make it possible for private investors to start investing. A broker uses the internet to quickly send orders from the private customers to the stock exchange so that we can act quickly and professionally.
Brokers give an overview: assistance with investing
One of the most important things brokers do is that they give an overview of the available investment products. It also indicates the corresponding rates of both the present and the developments in the past. This allows you as a private investor to decide what you want to invest in and for which prices.
Cost brokers money too?
Of course, investing costs money and you can’t expect the help of a broker for free. Most brokers will earn their money in a way. This is possible because they enter transaction costs or charge a fixed percentage of the profit. The transaction costs are the costs charged for the purchase or sale of shares. These costs have fallen enormously in recent decades due to the rise of the internet. In the 1990s, you soon lost dozens of guilders to the transaction costs, while this is now often less than ten euros.
Other ways brokers determine the rate
Some brokers work in a different way: through so-called spreads. This is the difference between the selling and the selling price. This difference between these prices will be the profit of the broker. If you are planning to choose a broker, it is important to take into account the costs that come with it.
It is important to know whether you are investing in the short or long term. Most brokers are especially suitable for long-term investment. If you prefer to invest in the short term, you will not benefit from the costs per transaction as a private individual.
Comparing online brokers: Why is this important?
As described above, you cannot invest without a broker. If you want to trade on the stock market as a private individual, you will have to make a choice for a broker. This is an important choice, since you are dependent on the broker you choose for a large part of your business. That is why comparing brokers on the internet is a very wise idea, so you do not make a hasty choice. There are a few things you should look for when choosing the right broker such as the cost, the quality of the helpdesk, possibilities for support and security. These things, and why they are so important.
The fees and security of the broker
The costs can vary greatly between brokers, and will directly affect your return. Stunten with rates of brokers can therefore be attractive, but use your common sense. Pay attention to the fine print and hidden costs, so you don’t face unexpected problems. The security of the broker is also important. Read multiple reviews on the internet from people who use this broker and think logically about the choice you make.
Analysis and educational opportunities
When investing, it is very important that you get the right tools. For example, you want to know how analysts think about certain companies and which options can be the most profitable. In addition, as a starting investor, it is also very nice to learn more and to brush up on your knowledge. You can therefore also look at the possibilities to analyse the fairs and to receive education. Pay attention to any additional costs that may be attached to this.
The Importance of Good Customer Service
You may always have questions about your shares or the payouts. With these kinds of questions it is very nice to be able to use an expert customer service. Does the broker offer a telephone customer service and are the employees well trained? These are important things to consider when comparing the brokers. This way you can be sure where you stand. In addition, it is also important that customer service can quickly handle your questions. A customer service that only answers your question after a week, you do not benefit from course. Therefore, do good research online to the various brokers and their customer service providers
Only through your computer or mobile app?
If you lead a busy existence, you will not always have a computer or laptop at hand. As a result, it can be very nice if a broker also has a mobile app, so you can also continue investing along the way. Offering apps is becoming increasingly self-evident in the current time of technological developments, but it is not yet the case everywhere. It’s smart to look at this before you make a choice.
Compare multiple brokers
With most brokers you are not tied to anything and you can quickly and easily cancel your account. It is a wise idea to try out multiple brokers. Give the companies a chance, you dig into it and see if it suits you well. By trying, you really notice whether the company suits you well. By using multiple brokers side by side, you can compare them well and see what your personal preference is for. It may be that the one’s interface appeals to you more that the other, or that customer service is significantly better with the other company.