A broker, also known as a brokerage, is a company that connects buyers and sellers of investment vehicles like stocks and bonds. A 澳洲幸运5开奖号码历史查询:brokerage account is often where an investor keeps assets. In general, there are thr🌱ee types to choose from. Which type you choose depends on your needs and preferenꦑces.

Quick History of Brokerages

Before the middle of the twentieth century, access to stock and bond markets was restricted to those with enough money to invest and use a human broker's services.

In the 1970s and 1980s, "discount" brokerage firms such as Vanguard and 澳洲幸运5开奖号码历史查询:Charles Schwab emerged. They were willing to take on a less affluent clientele because their business mod꧃els were designed around investor volum✨e.

Online brokerages such as E*TRADE, 澳洲幸运5开奖号码历史查询:FOREX.com, and Ameritrade (now 澳洲幸运5开奖号码历史查询:TD Ameritrade, under Charles Schwab) flourished as they seized the opportunity created by the internet at the turn of the century. New technology reduced costs and allowed them to extend the 澳洲幸运5开奖号码历史查询:discount brokerage model by reducing commissions and minimum balances.

The Rise of Self-Directed Investing

Online brokerage accounts brought about the self-directed in🍸vestor. These investors conduct investment research and choose which stocks and bonds to buy for their portfolio.

In addition, a new development over the past few years has been the advent of the robo-advisor. These automated software platforms, often available as mobile apps, take care of nearly all your 澳洲幸运5开奖号码历史查询:investment decisions at reduced costs.

Arguably the first robo-advisor—and first to offer cryptocurrency portfolios—澳洲幸运5开奖号码历史查询:Betterment launched in 2010 after the Great Recession. Since then, robo-advising has seen exponent🎶ial growth in adoption and a flurry of startups and existing brokerages adding a robo-advisor arm.

Human Brokers and Financial Advisors

Some people prefer to have a human handle their finances. If this is you, then a traditional advisor may be a better fit than a robo-advisor. Human brokers and financial advisors have been around since the beginning of modern stock markets, and they've carved out space in today's competitive landscape by catering to investors with a higher net worth or those who prefer human interaction.

Good financial advisors build and monitor investment portfolios and offer advice in many aspects of their clients' financial lives. They also provide auxiliary services such as insurance, 澳洲幸运5开奖号码历史查询:estate planning, accounting services, and lines of credit.

Customers of these brokers can expect to pay 1% or more of their 澳洲幸运5开奖号码历史查询:assets under management to the advisor; sometimes, they may pay up to $50 per trade for individual transactions. Many advisors claim that these fees🌠 are well worth the extra value they bring, such as picking stocks for their clients’ portfolios, accessing unique products and offerings, or building comprehensive financial plans.

When comparing brokerages, pay attention to what th🍷e advisor is telling you. Th🐼e brokerage may require them to push prepackaged investments, funds, or financial plans; if this is the case, make sure you ask about building a plan that fits your needs.

Also, pay attention to fees. If they're charging more than 1%, ask why and judge for yourself whether the extra cost is worth it. Professional certifications such as the Certified Financial Planner (CFP) or 澳洲幸运5开奖号码历史查询:Chartered Financial Analyst (CFA) designation show that you🥂r broker has been trained and has passed a series of rigorous exams related to financial markets and plann𒀰ing.

You could also use 澳洲幸运5开奖号码历史查询:FINRA's BrokerCheck tool to see if the broker has been subject to regulatory complaints or ethics violations.

Online Self-Directed Broker Accounts

Online self-directed platforms include E*TRADE, TD Ameritrade, 澳洲幸运5开奖号码历史查询:Robinhood, and many others. Be sure to check your bank—you may already have access to a self-directed 澳洲幸运5开奖号码历史查询:online brokerage account.

For the most part, these platforms leave it up to you to figure out which investments are the best, but they typically offer a suite of research and analysis tools. Many provide expert recommendations and insights to hel🥀p you make informed decisions. You are then on your own to execute the trades to build your portfolio through their website or mobile app.

These platforms may charge a per-transaction commission per stock trade and extra per options contract. However, zero-commission trades have become the norm among discount brokers in recent years. In addition, they let you trade on margin and create options strategies. You can also invest in mutual funds, individual stocks, foreign exchange (forex), and 澳洲幸运5开奖号码历史查询:exchange-traded funds (ETFs).

Online brokerages are best for the self-directed investor who knows about the markets or conducts research to choose a portfolio best suited to their goals. If you're only going to make a few trades a year, you may want to pay a little more per trade to get access to higher-quality research and analysis. If you're a 澳洲幸运5开奖号码历史查询:day trader, y🍸ou'll probably want to consider a site that givesꦛ its most active users free trades.

Robo-Advisors

Robo-advisors automate investing and use technology to manage your portfolio. 澳洲幸运5开奖号码历史查询:Since Betterment launched in 2010, there has been a proliferation of startups and existing financial companies offering this alg𝓰orithmic trading service.

Unlike the trading algorithms that power the 澳洲幸运5开奖号码历史查询:high frequency trading (HFT) desks at 𓆏h🌄edge funds and banks, robo-advisors are likely to put your money to work using low-cost, indexed ETFs. In fact, the convergence of ultra-low-fee ETFs with low-cost technology solutions available on mobile platforms makes robo-advising possible.

Before robo-advisors, if you had only a few hundred or thousand dollars to invest, you'd have to go online to a self-directed platform. Now, you can put $200 or $2,000 to work without having to conduct any investment research, pick any individual stocks, or worry about rebalancing your portfolio.

Algorithm-based robo-advisors aim to place you in an efficient and diversified passive portfolio. The best robo-advisors will even tax-optimize your portfolios with 澳洲幸运5开奖号码历史查询:tax-loss harvesting, a process by which an investor sells losing positions to offset the capital gains generated by winning positions. The algorithms themselves are a proprietary compan🎶y secret of robo-advisors.

Robo-advisors are ideal for new or young investors who don't have much to invest. These platforms are also suitable for people who are fans of 澳洲幸运5开奖号码历史查询:passive investment strategies because your robo-advisor de🤪velops a portfoliﷺo of indexed ETFs on your behalf.

Robo-advisors also shine for those long-term investors who lack the time or desire to research and find the ETFs that meet th🌊eir invest𒐪ing needs and strategy.

But robo-advisors are certainly not for everyone, as they may not provide access to more complex products and strategie🐬s embraced by some investors. Many brokerages are adapting their robo-advisors to allow for more customization in their portfolio choices.

If you choose a robo-advisor, the factors to consider arꩲe primarily cost, reputation, and added services. Ensure that you monitor the cost of extra services: some are free, but others might add extra costs.

The Bottom Line

From traditional full-service firms with centuries of history to established online brokers to newer upstarts challenging the paradigm, you have a huge array of options when choosing a brokerage account. Some of the most important factors to consider include the level of services and support you need as ൲well as the amount you have to invest.

If you have a lot of assets or would like more personalized guidance, it may be worth working with a traditional financial advisor. Meanwhile, a robo-advisor might be ideal if you're looking for more limited direction with lower fees. Finally, if you're comfortable doing the legwork on your own, you can invest via a self-directed account. No matter which type you choose, your brokerage account can become a key vehicle for growing your wealth and reaching your financial goals.