For beginners, to start as stock investor, you will need to open a brokerage account with a reputable stock broker. Depending on how you want to go about investing in shares, whether it is through your own research or have your broker give you recommendations, will determine what kind of brokerage account you would want to open.
We have two types of stock brokers:
- Full service stock broker
- Discount stock broker
A full service brokerage account
A fully service brokerage account generally charges higher commissions but provides investors with the personal services of a registered stock broker, licensed to give recommendations on stocks and also conducts investment research for clients. Most full service stock brokerage accounts generally require a larger minimum deposit than a discount brokerage account.
A discount brokerage account
A discount brokerage account has lower initial deposit requirements and charges the customer considerably lower commissions, but does not provide clients with any research. Most discount stock brokerages offer their customers a trading platform and online-in house research which can be adequate for most investors.
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One investment strategy when opening a full service brokerage account, is the opportunity to subscribe to initial public offerings (IPO) of previously private companies in the process of issuing stock to the public-This is not generally available to customers of discount brokerages. Investing in IPOs of a promising company has made many millionaires out of regular investors.
Related: Key Principles to investing in a stock
After having your trading account opened, if it is with a discount broker, you can then research what type of stock you wish to purchase, many resources exist online. If you have an account with a full service broker, ask about, upcoming IPOs and how your broker can add you to a subscription list as well as what stocks are currently recommended by the brokerage firm.
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