How to Compare Stock-Buying Companies
- 1). Make sure the stock-buying company you are considering is a member of the Securities Investor Protection Corporation, also known as SIPC. This firm provides insurance to member firms, much in the same way the FDIC insures bank deposits. Although SIPC does not protect against stock market losses, it does protect investors in the event the brokerage firm fails. Check the SIPC website at SIPC.com, and look for the SIPC logo on the website of the brokerage firm.
- 2). Ask the stock-buying company about any minimum deposit requirements it may have. Many firms find that it is costly to deal with small deposits, and as a consequence those firms may impose a minimum investment amount. In addition, some firms without a set minimum may impose fees on deposits under a certain amount, and those fees could eat up a large portion of the investment funds. If you are starting out with a small amount of money it is important to seek out a stock-buying company with a low minimum. Many mutual fund companies will waive their minimum balance requirements if you agree to set up an automatic monthly investment program.
- 3). Compare investment costs and annual maintenance fees carefully. These costs can really add up, so it is important to keep them as low as possible. By shopping around and choosing the right stock-buying company you can keep your commissions under $10 a trade. And by choosing a low-cost mutual fund company you can keep your annual expenses well under half of 1 percent of your invested funds.
