How to choose a stockbroker

You're ready to buy shares. But how do you choose the right broker for you?

a woman

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So you're ready to buy shares. And you've read our introductory article. But you want more information on how to choose a stockbroker.

Unless you really value the research that a full-service stockbroker provides, you're likely best served by signing up with a discount online broker. And while we can't tell you which stockbroker will be best for you, here's a five-step checklist to help you decide

1. Which markets does the broker offer?

Are you only planning on buying ASX-traded shares like BHP (ASX:BHP), Telstra (ASX:TLS) or Woolworths (ASX:WOW)?

Or would you like to buy US companies like (NASDAQ:AMZN), Apple (NASDAQ:AAPL) or Facebook (NASDAQ:FB)?

Perhaps you want access to the UK, European and Asian markets, too?

The answer to this question will help you decide if you want one broker that can do it all, or you're happy to have perhaps one ASX broker and one for US markets.

2. How user-friendly is the website?

Buying shares needn't be complicated, but it can be a little daunting the first time. Does it have a comprehensive and easily accessible 'Help' section. Tutorials? Do the menus look relatively simple?

3. How accessible is customer service?

Even the most tech-savvy of us have questions. Maybe about the website. Perhaps about how the trade process works. Or you just want to know it's easy to get in touch if you need something. It's easy to overlook, but when things get tough, it's nice to know there's someone to talk to if you need it.

4. Are there linked bank accounts?

There's no need to have a bank account set up through your broker. Indeed, there are likely better accounts elsewhere. But linked accounts can have two benefits. First, it's just simple. You want to have a separate investment account to make regular savings and to have your dividends kept separate. And second, some brokers will give you discounted brokerage if you use their linked account.

5. How much does it cost?

I saved this until last for a very good reason: it's rarely the most important, and usually the least important part of your decision. In the context of all of the above, the long-term Foolish investor will likely be saving a very small amount of money by chasing the very cheapest price — and potentially passing up features that are more useful and more important.

Whether you're paying $15, $20 or $25 per trade just won't matter if you're only trading a couple of handfuls of time each year. So don't pay more than you need to — but don't confuse price and value… which is also worth remembering when it comes to choosing shares, too.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Scott Phillips owns shares of Amazon and Telstra Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon, Apple, and Facebook. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia has recommended Amazon, Apple, and Facebook. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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