Do You Really Need A Stock Broker?
In the world of individual investing there’s one question that seems to come up time and time again and it’s one that hasn’t really been answered to most peoples satisfaction. Do you or do you not, as an individual investor, need a stockbroker in order to successfully invest in the stock market? That’s exactly what I would like to talk about in this article today.
For many people the stock market is a mystery. They know that they’re supposed to be investing for their retirement, and they know that there is such a thing as the stock market, but they don’t often know much more than that and so the first thing they do is contact their local stockbroker.
Most small towns in America have several stockbrokers; individuals who set up shop and are usually loosely affiliated with a large brokerage company. For somebody who doesn’t know much of anything about the stock market, these brokers can be somewhat helpful in getting you oriented to investing.
On the other hand, if you know anything at all about the stock market or business, a stockbroker is probably a useless and counterproductive solution for you. Stockbrokers charge a great deal more in commissions then you will pay at any bargain online stock trading company such as E*TRADE or Ameritrade or Scott Trade or any number of others.
Also, when you get right down to it, stockbrokers aren’t supposed to give you advice. They are NOT licensed advisers, they are merely supposed to buy and sell what you tell them to. Of course, most stockbrokers don’t adhere to this and when you walk into their office and ask them what stocks look good they will always have an opinion, quite often based upon what the home office wants them to sell on any particular day.
It’s sort of like asking a used car salesman what car looks good. They aren’t going to turn you away.
This, in my opinion, is a horrible situation for anybody to get into; especially somebody who doesn’t know what they’re doing when it comes to investing in the stock market. If you aren’t sophisticated enough to be able to make your own stock picks then you shouldn’t be investing in the stock market at all. Relegating this responsibility to a stranger, in this case a stockbroker, is irresponsible and dangerous and it’s probably the number one reason why so many people get burned in the stock market.
If you don’t know much about the stock market you should learn. If you’re not in a position to take the time required to learn or if you’re just not a money oriented person then you should look to different types of investment vehicles for your retirement such as savings bonds or annuities or real estate investing.
So basically it comes down to this; if you’re sophisticated enough to make your own choices then a stockbroker is an overpriced and unnecessary option. You should just use an online broker. On the other hand if you aren’t sophisticated enough to make your own choices, you should not use a broker because you shouldn’t be in the stock market to begin with.