The Broker
Date Added: October, 1999
By Chris Stallman
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Unfortunately,
buying stock isn't as easy as walking into a grocery store and
telling the clerk "Hi, I would like 10 shares of Microsoft".
You actually have to set up some form of an account with a stockbroker
or online broker.
A stockbroker is a person who buys and sells stocks
for investors. But these people don't just do the buying and
selling of stocks for you, they also help you out in deciding which
investments to make.
In exchange
for these services, they charge you a commission on each stock trade
that you make. An actual broker may charge anywhere from $30 per
trade up to $100+ per trade. This is what hurts us young investors.
If you were to pay a relatively low commission of $30 per trade
to your stock broker to buy 5 shares of Microsoft at $90 per share,
the stock would have to go from $90 per share up to $102 per share
just to make up for these $60 in commissions.
But what has been the craze that investors have been
talking about is the ability to buy and sell stocks online. The
services that allow you to do this are called online brokers.
Online
brokers are pretty much websites that you go to and manage your
stock portfolio and allow you to buy and sell stocks.
Because you don't actually talk to a person when
you do this, you are actually handling your money by yourself. You
just type in what stocks you want to buy and how many shares and
the online broker buys them for you.
And because there is no interaction between investors
and stockbrokers, you don't have to pay those high commissions
that stockbrokers pay. The commissions that you do pay usually range
from as low as $5 per trade up to around $30 per trade.
Deciding which one you want to deal with is important.
If you feel like you can handle all of your investments on your
own, you might want to strongly consider an online broker. But if
you want some help with your investments, a stockbroker would be
better for you.
Because online brokers offer you more access to buying
and selling stocks, it is extremely
important not to get too carried away and always talk to your parents
before you buy and sell stocks.
But if you do decide that you want to deal with an
online broker and your parents agree to it, you need to decide which
one is best for you by evaluating all of them.
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