How To Pick A Stockbroker The Right Way
One of the questions I get asked the most is this: “How do I pick a good stock broker?”.
It’s a very interesting question, but probably not for the reason that you think! And it’s exactly what I’m going to talk about in this article today.
First, I need to take a little bit of a circular route. But try to bear with me because it’s worth it in the end!
So what exactly are people asking me when they ask this question? They’re usually asking one of two things. First, how do I pick a Stock broker that isn’t going to lose all my money, and second (and probably more likely) how do I pick a stockbroker who’s going to make me a lot of money!
Admit it, that’s what you were thinking when you asked yourself that question and came searching around on the Internet for the answer (and then found me here).The problem is, those are the two questions you should never ask, and if you have asked them then the answer is that you should not hire a stock broker.
Here’s where a lot of people get lost. They think stock brokers are advisors. “Hey, does your stockbroker have good tips?” is something you probably hear a lot. People think that certain stockbrokers have an inside track…tips…that will make you a lot of money.
While it’s true that there may be a few wheeler-dealer types out there, brokers aren’t SUPPOSE to offer you stock buying suggestions. In fact, their license demands that they don’t.
You see, stockbrokers are just glorified secretaries. You tell them what to buy, and they buy it. NOT THE OTHER WAY AROUND!
People get burned because they ask for and listen to the advice of their broker, even though their broker has no idea what they’re talking about. They aren’t trained to pick stocks! They’re just trained to BUY the stock you tell them.
So what should you do? You should go online and sign up for a cheap Internet stock buying account that lets you trade online, and you should put all your money in a broad market stock index mutual fund like an S&P 500 index fund. Set it up to automatically deposit X dollars per month into the fund straight from your paycheck.
You’ll end up making the historic average 7-10% gains the stock market makes each year without all the glorious BS that comes with working with a stockbroker. They’re the used car salesmen of the financial world. Stay away!
