Pros and cons of the discount brokers

discount brokers
Spread the love

In the share market, if you go for an offline account, you must get a broker who can offer required services related to trading. You can go for a discount broker or a full-service broker, but if you are planning to save a good amount on brokerage charges, the discount broker can be of more help to you than the full-service or traditional broker. Appointing a discount broker in this day and age is a well-accepted mode of putting in investment in the stock market. As you happen to employ any discount broker, it is certain you will derive many advantages, but at the same time, you may face several issues as well. Hence you must check his services and compare the same with your requirements before going for opening a trading account to him.

Below are given a few merits and demerits of these discount brokers.

Merits

The principal benefit that you are able to derive from the discount broker is the fees that will be very inexpensive. The lowest brokerage online trading takes from their clients the least fees. Every time you buy stocks or some other types of securities, you would not like to give away anything extra than you are required to pay. Whenever you hire services of a full – service broker, they shall usually levy a hefty commission which you are going to dole out from your wealth. The fee realized by this way is a percentage based system in which you will have to give fees as a percentage on the size of the deal. More the size more will be the commission. A huge amount of commissions are prone to claim a big chunk of your money gained in the stock market.

One of the best benefits that you are able to obtain by deciding for the discount broker is the security and safety. In most of the deals, in case the broker takes very low commissions, you must infer from it that they are compensating for it by doing trade in bulk. Generally, the best discount stock brokers tend to be big brokers. By this is meant that your money is in the safe hands as compared to some small broker not well known in the financial world.

Drawbacks

Even if you are in a position to bank some amount of money by working with the discount broker, it must be borne in mind that it has some downsides as well. Such as, with a number of the discount brokers, they place all the responsibility of investment decisions on you and do not offer advice in this connection. They are least bothered what you sell or buy until you continue the process of selling and purchasing. Maybe you are in need of assistance; you will not be able to obtain sufficient individual attention that you will get by engaging a traditional broker. In a lot of cases, they usually provide you an online portal or online trading platform to do trade and some common information on their websites that is for all people.

Related posts

Leave a Comment