One of the things that is very confusing for stock market beginners is how to choose an online discount stock broker. If you go to Google and search for them, there are dozens that come up. If you watch the television business news, you will see many of them advertise. How can you possibly know which one is right for you?
There are subtle differences between these discount stock brokers but for the beginner, most of these differences are not important. It is unlikely that you will ever need some of the services and differences that they offer, at least not for a while. Stock market beginners need to keep things simple which means finding an online broker that has a good, clean, easy to understand and navigate website as well as competitive prices.
You will be protected equally by law no matter which online stock broker you choose. Your accounts will be guaranteed up to $250,000.00 (just up from $100,000.00) and everything else that is basic will be virtually the same. You may find differences in prices as some offer trades as low as $4.95 while others may charge $9.95 or $12.95. Just because one online stock broker is cheaper doesn't mean it is any less reputable than another that charges more.
One thing to look out for is hidden fees. Stock market dummies as well as seasoned traders always need to read the fine print. Hidden fees and miscellaneous charges are tactics used by some of the discount stock brokers to raise their bottom line. Other differences may include things like being able to write checks from your account, short trading, and free trades if your order is not executed within a certain time period.
A big difference between each online discount stock broker is the website layout. Each company will of course use it's own software and some are more easy to understand and navigate than others. For instance, I love the E*Trade website as it is so easy to find your way around and find the information you need. The H&R Block website, on the other hand, seems archaic compared to E*Trade's and I always get irritated when I go on it as it will not allow me to easily find certain things. Unfortunately, you may not be able to fully test the website of a prospective stock broker before you open an account.
There is no right or wrong way of how to choose a discount stock broker. If you are a stock market beginner you will probably want to start with one of the better known ones who fall on this list:
TD Ameritrade
E*Trade
Scottrade
Charles Schwab
Zecco
First Trade
T. Rowe Price
ShareBuilder
Options Xpress
HOW TO CHOOSE A DISCOUNT STOCK BROKER
A BEGINNERS GUIDE TO STOCK DIVIDENDS
What are stock dividends? In this time of market crisis and uncertainty in 2008 – 2009, many stock experts are suggesting buying stocks with dividends and holding them until there is a recovery. One of the reasons for this is because it is difficult to find an alternative such as a high yield certificate of deposit. At least with a stock that pays a dividend, you are getting a small return with the hope that the stock will go up when things get better.
Not all stocks pay a dividend and most that do are under 1%. With some careful research though, you can find stocks that pay a higher dividend. What the stock gurus are saying is that you might find stocks that pay a reasonable dividend and buy those instead of stocks without dividends.
A company stock may pay a dividend for many reasons but the most common one is that they want to return something to their investors. Some companies, like Microsoft, may have a lot of cash and decide to give some of it to their investors in the form of a dividend. Other companies might need all their cash for research and development and not pay a dividend. Tech stocks are notorious for not paying out dividends.
No stock dividend is guaranteed safe. Any time a company gets in trouble, the first place they go the cut costs is their dividend if they have one. Therefore, even if you find a stock with a great paying dividend, you cannot buy that stock and be able to count on it. Especially now in these troubled times, stock dividends are in trouble across the board.
Some dividends are safer than others because of the financial position of the company. If a company is doing well, the dividend is probably safe and will not be reduced. Companies like to have a record of increasing their stock dividends but this is not always possible, especially in dire times like these. The stock market for beginners is now a rough place to get started but buying stocks with dividends is a good place to start. You need to do the research and find out what companies are doing all right and pay a nice healthy dividend. If you buy this type of stock, even if it goes down the dividend minimizes the losses.
