I am new to investments in stocks, what type of questions do I ask a stock broker?
I would like to invest in the stock market and would like to know what kind of questions do i ask a stock broker, what should i look for in a stock broker i definitely do not want a salesman?
- Chantal GLv 610 years agoFavorite Answer
First, find a brokerage firm in which the brokers are not paid commissions on the stocks they buy for you.
Next, discuss what your investment strategy is. Are you trying to create retirement income? Invest toward buying a house? That might deetermine what sort of investment account would be best for you--for example, an IRA or a brokerage account. Also, find out what is a realistic rate of growth, and determine what your growth goal is for your portfolio.
Next, discuss the types of stocks you are interested in. It's a good idea to diversify with regard to industry type and company size.
Plan a portfolio with your broker. During this stage, you decide what proportion of your total portfolio each of your stocks will comprise. For example, how much IBM would you want to own, versus how much Merck? To do this, you'll have to know how much loss you're willing to risk for each stock.
Before going to see a broker, you should familiarize yourself with the companies you want to invest in and have some idea of how well those companies are doing in comparison to the overall stock market. Read their prospectus reports, and then talk it over with your broker.
Note--Your broker cannot teach you how to invest; you'll have to learn that elsewhere.
- squadfixLv 410 years ago
Actually, it's the stock broker who should be asking you questions. In opening account, they need to find out what your situation/preferences regarding:
- Liquidity needs
- Tax status
- Risk Tolerance
- Investment Time Horizon
- Legal Issues
- Risk and Return Expectations
Account set-up statements all have sections dealing with these issues. So these are the types of things you should be thinking about. If you invest the money, will you need to pull some out soon...like to buy a house or something? How much risk can you tolerate?
To be honest, you should probably skip the broker alltogether and just invest in an S&P 500 index fund or ETF. No broker can beat the market for you. So in the long run, just invest in the market. If you want to set aside some money to 'play' with in buying individual stocks here and there hoping for a big winner, that's fine. But you need to have a diversified portfolio to reduce risk.
You may even consider investing in fixed income (bonds) and real estate, which can be done through ETFs very cheaply. Brokers are there to make money off of your money. They charge high commissions. You basically put their kids through college. They are completely unnecessary for the long-term investor.
Like I said, just invest in some low- fee ETFs and keep it diversified.Source(s): I once worked at a brokerage house, and I'm in finance.
- reevesLv 43 years ago
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