Posts Tagged ‘Should’

Online Broker Comparison – Questions Every Investor Should Ask

Online Broker Comparison – Questions Every Investor Should Ask

What kind of investor are you?  Are you an active trader, a buy and hold investor, or do foreign markets interest you?  Finding out what kind of investor you are is the first step in comparing discount brokers.  Each online broker you work with will have a specialty they’ve built their business around.  Some specialties include customer service, mutual fund management, low cost trading, real time tools, user friendly interface, or having a network of traders interact with each other.   Which of these specialties is the best?   The best broker is one that fits your needs.  

The best broker comparisons highlight the differences and make suggestions based on what kind of investor will be using the service.   Some comparisons are worthless because they are comparing apples and oranges and they fault the apple for not being an orange.  Each company is different and they have grown in different ways.  For the majority of investors most online brokers have all the services they could possibly ever need.  With that in mind what are the main areas to compare.

Ease of use.   Websites that are easy to use will help you avoid a lot of headaches.  Usually within a few minutes of trying to sign-up you will have an idea of how easy the rest of the company’s site will be like.   
Minimum balance to start an account and avoid fees.   Are you an active investor with access to enough cash to open an account.  Do you have enough available to avoid account minimum fees?  For most online brokers this is not an issue because they have eliminated all these kinds of fees.

Inactivity fees.  What if your account is inactive? Will you be charged a fee?  Some broker’s inactivity fees in are figured on a monthly basis.  If you are a buy and hold investor they may penalize you for not actively trading.  Again, this is usually not an issue.  This is usually an issue with big name brokers that haven’t really caught on to the low cost mentality.

Customer Support.  How easy is it to contact someone at customer support?  If you needed something urgent could you talk to a real person about your account?  

Investment Products.  Are you wanting to invest in more than just regular stocks, bonds, mutual funds, and options?  If you prefer mutual funds, does the broker have a wide range of no-load  and load funds to choose from?  Many brokers don’t like trading penny stock or excessively risky stock.

Timely Execution of Trades.  How long does it take for the broker to execute an order after you’ve placed it?  While most companies will be very close on time of execution some are worst than others.  A search engine can make short work of investigating if a company has had problems in this area.

Does the Broker have Physical Locations?  Many investors that are internet savvy have never placed foot in a physical location and have traded for years.  Other investors may take solace in knowing they can drive to a branch and talk to someone face to face.  

Trade Commissions.  How much will it cost to trade?  How many trades do you anticipate executing each year?  How much of your total investment will the commission represent?  Trading costs can add up quickly if you buy a number of individual stock, buy weekly, or sell regularly.

Research& Analysis Tools.  Are you a technical investor?  Free access to tools and research can save you hundreds of dollars each year.

Sophistication of trading tools.  Can the broker perform the type of trades you are trying to execute?   What kind of automation and customization are available to you?

Additional Broker Resources: TradeKing Online Broker || Review of Online Brokers || Low Cost Broker Review – Zecco.com

Be the first to comment - What do you think?  Posted by admin - October 3, 2010 at 5:54 pm

Categories: Online Broker Comparison   Tags: , , , , , ,

Is this a good time to invest? How should I invest?

Is this a good time to invest? How should I invest?

The thing there is no right or wrong time to invest in market. Your investment decision should depend on the price of stock and strength of the stock. There is no exact definition for right stock. . Investing in companies whose stock prices are currently undervalued but the company has good growth potential in future would be called as investing in undervalued stocks and generally advisable.

Following are couple of ratios to find undervalued stocks but to take decisions for investment further analysis is important and these ratios don’t provide all information.

Low Price to Earnings (PE) ratio

PE ratio is one of the most important ratio on which most of the traders and investors keep watch. The PE ratio tells you whether the stock’s price is high or low relative to its earnings. The high P/E suggests that investors are expecting higher earnings growth in the future compared to companies with a lower P/E. but, the P/E ratio doesn’t tell us the whole story of the company. It’s more useful to compare the P/E ratios of one company to other companies in the same sector/industry and not in different sectors. PE ratio of less then 10 is generally considered as undervalued provided it has future growth potential. And in some scenarios PE of 10 to 15 can also be considered provided the company has high growth performance in past and expecting same in future. Generally stocks bought below 10 and kept invested for long term given more great returns.

Low Price to Book Value (PB)-

Basically PB ratio is mostly utilized by value investors to find real wealth when the stocks are at their lower prices. So investing in stocks having low PB ratio is to identify potential candidates for future growth. A lower P/B ratio could mean that the stock is undervalued. Book value – It is the total value of the company’s assets that share holders would receive if a company closed down. Like the PE, the lower the PB, the better the value of the stock for future growth. Some of the investors become quite wealthy by holding stocks for the long term of such companies whose growth is based on their businesses instead of market. If the stock’s price to book value is below 1 then it is considered as undervalued.

Earning Per share –

EPS shows how the company is profitable and growing. EPS of a company should keep increasing year after year. So the conclusion is to have a look for the past 4 to 5 years EPS and check the consistent incremental growth in the ratio.

Above three are most widely used ratios but decision based on only above is not advisable.

Experts also suggest opening multiple accounts because different accounts offer different kinds of specials. For example TradeMonster rates for Options Trading is exceptional, on the other hand TradeKing offers one of the cheapest rates for Stocks trading. Incidentally both of them have specials going on currently for new accounts. For more details on how to select a brokerage firm for your needs, check out Finding The Best Online Discount Stock Brokers

CompareBroker.com aims at helping Traders (Stocks, Equities, Options, IRA, Mutual Funds) to make smart investing decision in stock market. We partner with different online stock brokers and bring out their value proposition to consumers for a fair comparison.

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Be the first to comment - What do you think?  Posted by admin - September 7, 2010 at 11:01 am

Categories: Trademonster   Tags: , , , ,

Should I Start Investing Now in the Stock Market?

Should I Start Investing Now in the Stock Market?

The thing there is no right or wrong time to invest in market. Your investment decision should depend on the price of stock and strength of the stock. There is no exact definition for right stock. . Investing in companies whose stock prices are currently undervalued but the company has good growth potential in future would be called as investing in undervalued stocks and generally advisable.

Following are couple of ratios to find undervalued stocks but to take decisions for investment further analysis is important and these ratios don’t provide all information.
Low Price to Earnings (PE) ratio –

PE ratio is one of the most important ratio on which most of the traders and investors keep watch. The PE ratio tells you whether the stock’s price is high or low relative to its earnings. The high P/E suggests that investors are expecting higher earnings growth in the future compared to companies with a lower P/E. but, the P/E ratio doesn’t tell us the whole story of the company. It’s more useful to compare the P/E ratios of one company to other companies in the same sector/industry and not in different sectors. PE ratio of less then 10 is generally considered as undervalued provided it has future growth potential. And in some scenarios PE of 10 to 15 can also be considered provided the company has high growth performance in past and expecting same in future. Generally stocks bought below 10 and kept invested for long term given more great returns.

Low Price to Book Value (PB)-

Basically PB ratio is mostly utilized by value investors to find real wealth when the stocks are at their lower prices. So investing in stocks having low PB ratio is to identify potential candidates for future growth. A lower P/B ratio could mean that the stock is undervalued. Book value – It is the total value of the company’s assets that share holders would receive if a company closed down. Like the PE, the lower the PB, the better the value of the stock for future growth. Some of the investors become quite wealthy by holding stocks for the long term of such companies whose growth is based on their businesses instead of market. If the stock’s price to book value is below 1 then it is considered as undervalued.

Earning Per share

EPS shows how the company is profitable and growing. EPS of a company should keep increasing year after year. So the conclusion is to have a look for the past 4 to 5 years EPS and check the consistent incremental growth in the ratio.

Above three are most widely used ratios but decision based on only above is not advisable.

Experts also suggest opening multiple accounts because different accounts offer different kinds of specials. For example TradeMonster rates for Options Trading is exceptional, on the other hand TradeKing offers one of the cheapest rates for Stocks trading. Incidentally both of them have specials going on currently for new accounts. For more details on how to select a brokerage firm for your needs, check out http://www.comparebroker.com – “Finding Best Online Discount Stock Brokers”. You will find the special offers going on from major online stock brokerage firms.

CompareBroker.com aims at helping Traders (Stocks, Equities, Options, IRA, Mutual Funds) to make smart investing decision in stock market. We partner with different online stock brokers and bring out their value proposition to consumers for a fair comparison.

Be the first to comment - What do you think?  Posted by admin - at 5:46 am

Categories: Trademonster   Tags: , , , ,

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