The Internet or in Person?

First, how do prefer conducting business? Internet brokers offer some of the best deals, but do you have trouble with using the Internet or do you worry your computer is not secure against data theft? If so, you might want to go to your local bank or a brick and mortar investment dealer like Charles Schwab for your brokerage.

If, however, you are comfortable with working online or prefer doing your investments from the comfort of your own home, the Internet is probably right for you. Most banks with their own brokerage firms also offer online brokerage services, and there are plenty of solely online brokers available as well.

Investment Options

What are you looking to invest in—stocks, bonds, or mutual funds? Maybe you want to get a bit exotic and trade in futures or hold precious metals like gold or silver.

Make sure prior to opening an account with a brokerage firm that they offer all of the investment varieties that you wish to purchase. Of the independent brokerage firms, for example, only a few firms like Questrade and Euro Pacific Capital actually deal with bullion. Otherwise, banks may be your best bet for bullion.

Additionally, for foreign stocks (not ADRs, but stocks actually listed on foreign exchanges), most online brokers cannot help you. If you’re interested in investing overseas, the in-house brokerage firms offered by larger banks are likely your best bet.

Price

Are you going to be making many trades or only a few? Do you require many investment options or just stocks and options? Do you require extensive broker-assisted trading or are you able to get along by yourself?

The price of a brokerage’s commissions is often directly related to the services it offers. If you can get along fine with less choices and no broker-assisted trading, you can pay fairly good commissions. Check out online brokers for the cheapest trades.

Minimum Opening Balance

Something to keep in mind when opening a brokerage account is how much of a balance you intend to hold in your portfolio. Lower prices and higher minimum balances often go hand in hand, since brokers can make some money off of reinvesting your free cash. OptionsXpress has no minimum opening balance, for example, but generally charges about $15 per trade.

Interactive Brokers, on the other hand, has a $10,000 minimum balance but offers trades at about $1.50 each. The customer service is also fairly barebones, which allows them to keep their prices so low.

Conclusion

Hopefully this has given you a few ideas on how to choose a broker. Just remember that if you don’t like one, it’s not the end of the world as you can always transfer to another for a nominal fee.