Online Brokerage Account Features
There are so many online brokers and so many online brokerage account features that its enough to make one dizzy
. The smartest thing an investor can do when evaluating brokerage candidates is to first decide his must-haves for account features, then decide what things might be nice to have, but arent essential. As for must-haves, here are the most important ones to look for:Money Movement
Nothing is more frustrating than not having enough money in your brokerage account to buy a stock that is suddenly on sale, while also having no way to quickly fund that account. Conversely, you never want to be in a situation where you have an important bill to pay, and not enough money in your regular bank account to cover it. Thats why having the ability to move money among all your different accounts immediately, or to move money around in more leisurely fashion is essential.
You want to be able to wire money into or out of your brokerage account. If you wish to wire funds and can do so before a certain time of day, that money will hit the desired account on the same day. With immediacy, however, often comes expense. Most brokerages will charge $15 - $30 for this privilege. Thats why youll also want check writing and Electronic Funds Transfer abilities. Both of these are usually free. It takes a day or two for funds to transfer, but if you arent in a hurry, its a great way to move money around with no hassle.
Variety of Securities
Even if you only intend to trade stocks when you open an account, as you become a more experienced investor, you may find that you want access to many different types of securities. You should choose a brokerage that permits you to also trade mutual funds, options, and fixed income securities such as corporate bonds, treasury notes, municipal bonds and CDs. It becomes difficult to create a diversified portfolio without having access to these important securities.
Research and Real-Time Tools
While many excellent research websites exist around the web, it is much more efficient to have all the tools youll need concentrated in same place where you make your trades. In addition, many online brokerage research tools are more robust than third-party websites. For example, you definitely want tools that will show you real-time quotes for multiple stocks, so you can keep tabs on stocks you may be considering trading. Youll want to have access to third-party stock reports from such firms as Standard & Poors, as these often include all the important financial data for any given company, such as earnings, balance sheets, and cash flow statements.
Youll also want a stock screener, which will assist you in searching out the types of stocks you are considering trading. Similarly, youll want a tool that gives you comprehensive access to mutual fund information and screens.
One of the most powerful tools youll want is some kind of charting software. This can be as simple as an interactive chart that allows you to compare a stock or mutual funds historical performance against at its peers. This helps you decide if the investment you are considering may be underperforming one that is similar. Even better is having access to more sophisticated technical analysis the study of past market information related to price, volume, and momentum in order to assist in the forecasting the future direction of prices.
Tax Information
IRS rules regarding the taxation of investments can be highly complex. Only recently have online brokeragerealized the value-add of detailed tax information. Youll want a brokerage that itemizes all the income and losses that are associated with your account. These include dividends, interest, and short and long term capital gains. Most importantly, your brokerage should include wash sales in their calculations.
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