Your Wealth, Health, And Lifestyle Newsletter

How To Pick The Best Stock Broker

By Jason Markum

Investing in the stock market is incredibly difficult under the best of circumstances. Make a few wrong moves and years of hard work and savings can be wiped out in the blink of an eye. The problem is, most of us don’t have any sort of training or background in finance, economics, or investments; and we certainly don’t know anything about portfolio management and the high-level math that goes into it.

The best option is to hire a professional investment adviser or money manager to handle all of our investments for us. The problem is, most investment advisers won’t even take you on as a customer or client unless you have over $200,000 in assets to invest. Many of us simply don’t have that much money to invest and therefore we aren’t worth the time and effort of a professional adviser

In that case, the best thing to do is put your money in a broad stock market index fund like an S&P 500 index fund. The trick is to make monthly contributions to the fund automatically and directly from your pay check or bank account. Making monthly automatic contributions allows you to take advantage of the law of averages which allows you to buy when the stock market is both down and up. Following the strategy you can expect to receive an investment return of between 6% and 8% per year because this is the historic average return of the stock market and your broad S&P 500 index fund will mirror the broad stock market.

The problem with that is that most people won’t be happy with a mere 6% return. Heck, with inflation pushing towards 5% per year, that whittles your return down to a mere 1% which is unacceptable to many people. In that case the only other option you really have is to find a good stockbroker who can advise you on how to make a little more money with your investments.

You can’t afford to switch from stockbroker to stockbroker in an attempt to find a good one because if you do that; all it takes is one or two bad stockbrokers to wipe out your entire investment portfolio. No, you have to be able to determine before hand whether the stockbroker is any good or not. Here are several questions you can ask your stockbroker right from the start.

What average return can you expect from your account? If your Stockbroker gives you wildly high figures than watch out!

Does your stockbroker invest his or her own money in the stock market? If so what kind of return do they usually get themselves? If your stockbroker doesn’t invest in the stock market, then why in the world would you give him your money?.

Ask what your stockbroker’s other clients are like. Do they fit into the same economic ranges as you? Do they have roughly the same amount of money invested as you do? What kind of returns have they received in the past?

Finally ask how long your stockbroker has been in business. Experience counts when it comes to the stock market and if your stockbroker is fairly new to the game then you may want to look elsewhere.

So there you have several questions to help you determine whether your stockbroker is worth their salt or not. Above all though keep your eyes open and listen to your gut instinct. Many times you can tell just by talking to a stockbroker how serious they are and how committed they are to making you money.

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