Stock
broking involves investing in securities and
a range of financial products on behalf of institutions,
corporates and private clients. The work of a typical stockbroker
involves researching and absorbing information about the
market in domestic or foreign equities, securities and
government stocks; deciding upon appropriate advice for
private clients, by phone, direct contact or review letter;
buying or selling for clients; managing and reviewing portfolios;
and underwriting new issues in larger firms.
However, finding the right broker depends upon the
kind of services you require and the amount you’re ready to pay for it. For instance, advisory stockbrokers
recover the cost of holding your hand through a higher commission on deals;
so you could find yourself paying five or ten times what those in non-advisory ‘execution
only’ accounts are charged. It is acceptable as long as you get your
returns, but will certainly make trading frequently an expensive affair. So
also, if you don’t have substantial money (say
at least £30,000) to invest, big advisory brokers is probably not
going to be interested. In this case look out for some of the regional
stockbrokers,
which have lower overheads and charges.
Some
brokers even offer a discount if you trade with them more
than a certain number of times per month or quarter. Here
you need to bear in mind that you’ll always be paying
stamp duty on every purchase; so even if the commission
is a flat £10, a £10,000 stock purchase is
going to cost you £50 in stamp duty on top.
While
some others offer quite competitive rates for the cash
you leave in your account. Though you may not get much
on the first £500-£1,000, but if you leave
more than that make sure you’re getting a rate equivalent
to a decent bank savings account. However, there is no
necessity to keep large sums at your brokers place unless
you’re likely to be dealing at short notice. Many
brokerages now have facilities to accept payments electronically,
or by Switch card, as well as by the traditional cheque.
Some
brokers also offer telephone dealing as a useful back-up
if you want to deal in a hurry, and do not have immediate
access to the Internet terminal. It also helps if your
computer or the broker’s website is down. Some of
the very cheapest Internet brokerages do not have telephone
dealing, while those that do often charge a little more
for the privilege. Investors who are new to dealing often
find that it provides helpful reassurance to talk to a
real person.
Finally,
a word of caution! Never go for a broker which approaches
you. Always make your own decisions and double check whether
the company is
genuine.
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