If you aren't in the stock market now, this might be a good time to start. But how do you pick a discount broker?
Last week, I got an email from a reader who saved some money but isn’t quite sure who to trust with it.
I’ve got a little bit of money that I would like to invest long-term in the stock market. But I don’t know which online company to go with. What are the differences between them and what company do you use?
First of all, Jered, congratulations on saving money now and having the vision to invest it for later.
There are many discount brokerage firms you can deal with online – and just as many opinions about which is the best. Each has slightly different terms, from account minimums to commission schedules. There are lots of articles that can help you find points of comparison for online brokers, including this one at Barron’s and this one at The Motley Fool. Check them out.
To answer your question regarding who I use: I’ve been with Vanguard for many years, but that’s more the result of long habit rather than comparative analysis. I trade so infrequently that commission schedules aren’t a real concern to me. I have stuck with Vanguard because they’ve been around a long time, they’re big (and thus safer), and they’ve traditionally offered some of the lowest-cost mutual funds in the business.
But more important than who you invest with, Jered, is how you invest. Last year, a reader asked me What To Do With a Windfall? Investing in the stock market was only one of four options. For instance, have you paid off your credit cards and started a rainy-day fund?
And earlier this year, a couple of readers asked me, I’d Like to Invest… Should I? I’d suggest checking that out for the nitty-gritty details about whether the stock market is right for you right now.
As I say on my portfolio page in big read letters, however, THESE ARE NOT STOCK RECOMMENDATIONS! I’m not a stock trader, I’m a long-term investor in both stocks and real estate. So remember that what’s right for me may not be for you.
You’re going to have to do a little reading, Jered, but not an overwhelming amount. And no matter how you invest your money, if you follow some basic principles laid out in the links above, you’ll do just fine.