| Every investment club needs to work with a broker. | | | | investment club will need to decide what aspect of |
| No one member of the club is going to be able to | | | | the brokerage is more important to it. If you're |
| provide the constant watch on the markets that is | | | | thinking about hiring your discount broker from the |
| necessary to provide up-to-date information on the | | | | Internet there are some things that you should keep |
| stocks that your club may be considering. However, | | | | in mind. Online brokers generally fall into one of three |
| it's a good idea to investigate several brokers, of | | | | groups: |
| different types and have the investment club meet | | | | + Very inexpensive. If your investment group is |
| to discuss the various options before making any | | | | planning on doing a lot of buying and selling in the |
| decisions. While many investment clubs will use a | | | | stock market you'll want to think about using a very |
| full-time broker who guides them and offers advice | | | | inexpensive broker for your transactions. Most of |
| at the occasional meeting, others prefer to use a | | | | these inexpensive brokers charge anywhere from $4 |
| discount broker. | | | | to $12 per trade. + Moderately priced. The mid range |
| A discount broker will give the investment club some | | | | price that these brokers charge is anywhere from |
| detailed information about stocks but won't give any | | | | $12 to $20 per trade. + Expensive. Brokers that |
| advice about what to sell or buy. Using a discount | | | | charge a high fee per trade often offer you the best |
| broker is generally a more popular choice since the | | | | customer service so the price might be worth it to |
| purpose of most investment club is to make their | | | | your investment club. You'll have the opportunity to |
| own decisions about what stocks they want to be | | | | work with a broker that gives you great service. |
| dealing with. In addition, a discount broker does not | | | | These brokers generally charge anywhere from $20 |
| charge the same commission as a full time broker. | | | | to $30 per trade. When you're looking for an online |
| The investment club may also want to consider using | | | | broker you will be basing your decision on customer |
| the services of an online broker. Online discount | | | | service and the way the website operates. Take |
| brokers will have low commissions that can be a | | | | some time to look carefully at the website. You'll |
| financial benefit to your investment club. On average, | | | | want to make sure that the website easy to |
| an online broker will charge $8 or less per transaction. | | | | navigate and the information is clearly presented. |
| If your investment club decides to use a discount | | | | You'll also want to know what type of customer |
| broker, you'll need to know how to find one. | | | | service the broker offers. You'll be able to make your |
| However, it won't matter too much what discount | | | | decision about customer service after you conduct |
| broker you decide to use so long as your investment | | | | your first trade with the broker. Consider whether |
| club is allowed to pick your own stocks. | | | | there are any other incentives offered that might |
| The investment club should delegate one or two | | | | make you want to hire the broker. |
| members to find the best discount brokers that they | | | | These can include: |
| can find, both on the Internet and locally. Since there | | | | + educational books and materials to buy at a |
| is a great deal of competition when it comes to | | | | discounted price or to read online. + air miles for your |
| discount brokers, the investment club will be able to | | | | air mile program + free Internet access + a discount |
| get some great deals in broker fees if you take the | | | | on your first trade |
| time to look for them. There are a few things that | | | | But the investment club shouldn't make its decision |
| you should keep in mind when you're looking for a | | | | about what broker to use based solely on what |
| discount broker, such as what sort of customer | | | | extra incentives that are offered. It should take |
| service the broker offers, what fees they charge, | | | | consider all the different aspects of the brokers |
| and whether they offer any other incentives to hire | | | | carefully. But if it comes down to two or three |
| them. You'll be able to see many discount brokers | | | | brokers that have caught the attention of members |
| offering you their services both locally and on the | | | | of your investment group, the incentives might be |
| Internet. | | | | enough to tip people towards one or the other. |
| In general, the fees charged by the broker should be | | | | Always keep in mind that the investment club can |
| quite low. However, keep in mind that choosing the | | | | switch brokers at any time if the members not |
| broker with the lowest fee can mean you will end up | | | | happy with the broker they've been working with. |
| receiving a fairly low level of customer service. The | | | | |