Your decision to invest can be guided by Investment professionals that offer various types of services charging different fees. Bankers, insurance companies and accountants can also give you valuable feedback. There is another category, the broker who can help in making your investment choices.
The financial planner will conduct a detailed assessment of your financial profile in order to formulate a strategy that fits your requirements. In contrast the brokers may dispense advice only on the merits or demerits of individual stocks, bonds and mutual funds. Brokers earn money through commissions they book on each sale and purchase brokered through them. Brokers can assume any degree of sophistication, you may find them as individuals extremely experienced in stock trading, or as firms or large corporate type entities that employ whole teams of researchers and market analysts.
An individual broker may operate a discount brokerage charging a lower level of fees because he has only himself to fend for. The full service brokerage will cost more because you will be compensating the higher costs of expertise backed by extensive market research and company analyses. You can identify a good brokerage firm with guidance from a financial wizard or banker who knows the ropes. Thereafter, it’s a question of meeting the broker face to face to sound him regarding your disposable investment funds and expectations, and deciding on the best possible investment options.
Typically, you will be required to execute a brokerage agreement before opening an account, and you need to clearly understand the terms and conditions specified. It helps to honestly share information regarding your financial status, income, net financial worth, investment experience or lack of it, and your perception of risk, and to what extent you would be willing to take on risk. This is a necessary and fruitful interaction for both the broker and the investor. The agreement that you enter into with a broker should be very clear on crucial points:
Who takes the final call on buying and selling?
Many people are content with spelling out their broad financial expectations and allow the broker the discretionary to decide the price, the type of stocks, the amount that ought to be invested, and the timing of the sale or purchase. If you permit the broker a greater degree of financial control over your money, ensure to follow up and satisfy yourself that the transactions are benefiting you.
Deciding how to pay for your investments
Many investors, especially beginners, prefer to open “cash accounts” that enable full payment for each purchase that is affected. In contrast to this there is the “margin account” where the broker finances you a portion of the money needed to make an investment, especially when you run short of cash. This carries a higher risk. Such a “loan” taken from the broker does not operate like a car loan with payments split up in installments. If there is a drastic reduction in prices of certain stocks that you invested, you may be required to make good the investment in full, immediately. The broker can also unilaterally sell securities for recouping losses.
Deciding how much risk to bear
You need to satisfy yourself whether the investments made by the broker are in tune with the investment goals that you have outlined in your agreement and broadly conform to your age and age related goals, and the risk profiles you have selected.
Dealing with funds crises
When you deal with brokers and margin accounts there will be occasions when you may need funds at short notice and approaching bankers may not guarantee instant solutions. In such emergencies, taking out a loan for vehicle title can help you raise money very quickly. The fast car title loan can be raised by offering your vehicle pink slip as collateral. The auto collateral loan formalities are highly simplified and even a bad credit track record will not prevent you from accessing these loans. Interest rates below 25% APR and flexible repayment slabs are other plus points of the cash loan for title.