When you first get started investing, you rely on a broker to teach you about trading and guide you through the process. Though they can be helpful, you don’t need a stockbroker to help you navigate the market and make your trades. Keep reading to learn more about why you don’t need a stockbroker, how to create an online trading account, and how you can make trades broker-free.
Why Don’t I Need a Stockbroker?
Technology has developed so much that you no longer need a broker to gain access to the financial markets. Because of this, if you’re familiar with the markets and trading, it is completely possible to ditch your stockbroker and handle your trades yourself. In fact, there are even some benefits for going broker-free, including:
- It allows you to develop your investment skills and expand your knowledge of the market.
- You can be more responsive to your trades since you are able to remain aware and up-to-date on developments with your stocks and in the market.
- By avoiding having to pay a broker’s commission, you can lower the costs associated with each trade and increase your profits.
How Do I Create an Account?
There are a ton of apps and online sources that are designed to facilitate your trades. To set up an account, you need to:
- Shop for an online broker by comparing the costs and policies associated with each one.
- Choose a firm that meets your needs in regards to the required minimum balance and additional fees.
- Visit the firm’s site to open an account and complete the application.
- Go over the application as well as the restrictions associated with the account before you submit.
How Do I Make Trades?
Brokers are wonderful resources, but you don’t need them to make trades. To start trading on your own, you should follow these simple steps:
- Choose a broker-free plan. Companies that want to sell shares without the need for a stockbroker use certain plans. There are a few options, but the most popular are Direct Stock Purchase Plans (DSPP) and Dividend Reinvestment Plans (DRIP). They each operate a little differently, but you can earn a profit with either.
- Research companies before investing. It’s always important that you spend time looking into companies and stocks to make sure that you are confident in investing in them. Review the company’s growth history, what trends drove these increases in value, and the potential future of the industry and market.
- Ensure your account maintains enough of a balance. DSPP accounts use a checking account for you to pay your deposits, while DRIP accounts have specific accounts you have to start through a financial institution. Either way, you’ll need to make sure that your account’s balance is maintained so that you can pay your monthly deposit without an issue.
- Buy stocks. After you have researched prospects and figured out which stocks seem promising, you can start making your first purchase. Which broker-free investment plan you go with alters the process of purchasing stocks slightly.
Though it’s possible, broker-free trading does require a bit more of your time and attention. Before you decide to trade without a broker, make sure you consider the advantages and disadvantages.