Investing tip: how to pick a brokerage
Here are four criteria that you should use to choose a brokerage:
Low-cost trades. Keeping trading fees very low is a critical element of your investment strategy. Go for an online brokerage firm with per-trade fees below $25, and preferably closer to $10.
Easy tax management. When selecting a brokerage (if you are investing in a taxable account), it's crucial to find an online broker that allows you to identify and sell specific tax lots with ease. If the broker also provides a summary of unrealized gains and losses by purchase lot, even better.
Portfolio allocation tools. It’s relatively easy to track your portfolio and asset allocation using a spreadsheet. But it’s even easier if your brokerage does that for you. And sure enough, the best online brokerages do show you your asset allocation.
Maximum interest on your cash. Most investors have some of their funds in cash at some time. Pehaps it's taking you time to allocate your assets, you've just been paid some dividends, or you just want to leave some of your money in cash for a while. In all of these cases, you don't want to leave your money in a regular brokerage account, as the interest paid is tiny. Instead, look for a brokerage that allows you to move uninvested cash to a savings account easily and fast, without having to pay fees to do so. E*Trade, for example, allows you to move money with a click of a mouse between a brokerage account and an E*Trade bank account that pays much higher interest.
Comments
If you are not a day-trader and don't need all the bells and whistles of some brokerages, you can trade (and invest) using lowtrades.com - they are the cheapest broker I've found and the price is right -$5 per trade (limit or market). Commissions will kill you (trust me, I know) and limiting commission to $5 a trade will give you an edge.
Good luck