Tips for Choosing and Working with the Stockbroker

In order to do any forms on transactions on the stock market, one of the people you will need is a stock broker. A stock broker is basically someone who is licensed to perform sales and purchase of securities listed in a stock exchange. They take several tests before getting the license to do the transactions. Normal people who do not have the license are not permitted to do the exchange. This is to ensure that the people performing the transactions have at least the basic experience and knowledge on what they are doing.

A stockbroker offers many services to a client, including the following:

Know the client
Keeps the client informed
Purchases and confirms securities sales
Insurance protection
Offers special accounts

How to choose the Stockbroker

In selecting a stockbroker, the following suggestions can be helpful:

Look for a well-trained specialist, as in the selection of an accountant of lawyer. Get recommendations from an accountant or lawyer or persons who have had successful relationships with a broker.

Background. Brokerage firms have pamphlets describing their services, the securities available and exchanges where traded, purchase recommendations, and the costs and commission charges. Make certain that the services provided can accommodate your investment objectives.

Qualities. You should feel at ease with your stockbroker since you will be providing personal information about your finances and investment goals. The stockbroker should listen to your expectations and understand your needs. Based on the information provided, the stockbroker can develop an investment strategy tailored to an investor’s needs. Make sure you understand the investments that are recommended to you for purchase. A good stockbroker takes the time to explain how any security purchase fits your investment goals.

How to work with the Stockbroker

As investment decisions are made with the help and advice of your stockbroker, keep these factors in mind:

It is your money being invested and you have the final decision of how and when the investment should or should not be made.

Read and understand the prospectus and other information given to you by your stockbroker.

Always understand what risks are involved? How does this security purchase help you reach your investment goals?

Any questions should be fully answered by your stockbroker. Continue to make contact until answers are obtained. Do not approve any purchase until your questions are satisfactorily answered.

Keep track of your investment through review of the quarterly and annual company report, and financial information in newspapers and periodicals. Review all confirmations and account statements you receive from the brokerage firm. Ask your stockbroker to explain anything you might not understand or answer any questions you might have from your review.

Beginner Investing: Stocks and Bonds Compared

One of the most exciting things about investing is the sheer number of options you have to invest in. If you are new to investing, it can be a bit overwhelming at first, but once you understand all of the doors that are open to you, it can lead to a “kid in a candy store” type of feeling. Probably the two most traditional investments that most people have heard of are stocks and bonds. If you were to check the average portfolio of an average investor, you would likely find half a dozen stock investments, some mutual funds and some bonds. The great thing about stocks and bonds is that they work together to help balance out the amount of risk in a portfolio: stocks tend to be higher risk while bonds tend to be lower risk. The first thing that every new investor should learn is that your portfolio should have a balanced amount of risk to be considered healthy. Let’s take a look at why having both stocks and bonds together makes so much sense.

To the untrained listener, when you talk about investing, you are talking about stocks. Not only are stocks the main from of investment for millions of people, they are also the main ingredient in mutual funds and in many other forms of investing. To put it simply, when you own a share of a stock, you own a piece of a company; a company that you believe is going to grow, prosper and earn even higher profits then they earn now. It is a vote of confidence in that company. When you buy a share of a company, that company receives that cash and uses it to invest in the future. If things get better, your stock becomes more valuable and then you can choose to either sell it and turn a profit on your investment or you can hang on to it and hope that the value climbs higher so you can sell it at a later date and make even more money. Most stocks can be divided up into two major categories: high risk and low risk. It is important to note, however, that all stocks have risks, even “blue chip” stocks that are usually the safest to own. Over the years, some types of stocks have proven to carry a higher risk than others, such as airline stocks or technology company stocks, while energy stocks tend to be fairly stable. A “blue chip” stock is stock in a company that has been around for a very long time and is constantly turning a profit, such as Shell Oil or Microsoft. You could still theoretically lose money on a blue chip stock investment, but there is much less chance of Shell going out of business tomorrow compared to a new start up company that has recently gone public.

Bonds are a much lower risk type of investment that many people use as their very first investment. Perhaps you once owned municipal bonds or even war bonds. These types of bonds work the same way that commercial bonds do. A company needs to raise money so they sell bonds. You can buy these bonds and then, on a certain date in the future, you can cash them in and make a small profit. Even big time investors with huge portfolios invest in bonds because they are relatively safe compared to stocks, although there is always a risk when you invest. Some companies offer both stocks and bonds at the same time as a way to earn money for future investing.