Discount Broker VS Full Service Broker
Have you ever come across the term Discount broker and full service broker? No, right? All we know is term brokerage which is charged by the broker on every trade they carry out.
But in this article we will see a distinction between the same.
Discount broker is a basic service broker which provides service of buying and selling of stocks. It is a self service option for the investors. A discount brokerage account has very limited fees such as transaction and AMC charges, which are kept to a minimum level. The services offered by discount broking companies vary but many do not provide research services, investment services and IPO application services in companies, Mutual Funds, Bonds, FDs etc.
Full service broker is a fully managed investment account in which the brokerage firm has complete discretion to trade on your behalf. This frequently appeals to busy folks who lack the time or willingness to handle their own finances.
The biggest disadvantage of using a full-service brokerage is the high expense. Although commission rates aren't as exorbitant as they previously were, you should still expect to spend significantly more each trade with this type of service than with a cheap broker. Those that use management services often pay a proportion of their entire assets in fees each year.
You might think which option I should opt for. right? You should give a discount broker a try if these are true for you:
- Don't have much money to invest and can't afford to pay high fees or charges
- Prefer to make your own investment decisions and avoid being disturbed by salesmen
- Well equipped with Mobile trading & online services with less human connect.
- Good at understanding how to use tools and resources to gain the knowledge you need to make sound financial decisions.
- Other financial services are also available to you easily. By contrast, you should opt for full-service broker if these characteristics fit your situation:
- Intimidated or terrified by the concept of investing?
- If you want quality research advice on investing, you should go for a full service broker.
- Have a high networth and want a service guidance on overall portfolio management
- Already work with an institution for private banking, wealth management, or commercial business and want to add their brokerage to your business dealings
So, yeah call up your broker and tell him which service you would like to seek in your investment journey.
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