The first step to starting your investment journey is, of course, opening a brokerage account. But, that step is said easier than done. Choosing your first discount broker, in fact, is not that different from choosing a stock- requiring a lot of careful contemplation, and not all brokers are right for all investors.

Before choosing a broker, you have to understand the credentials for a proper broker. There are two types: regular brokers who deal directly with their clients, and broker-resellers who act as intermediaries between the client and a larger broker.

Regular brokers are presumably more reputable than broker-resellers. Keep in mind, that’s not to discredit resellers, but rather a cautionary tale to check on their backgrounds before signing up. Whereas for regular brokers, for example, are usually members of largely organized organizations such as Scottrade of Capital One Investing to the Financial Industry Regulatory Authority and the Securities Investors Protection Corporation.

Even further, there are distinctions between full-service brokers and discount brokers. Full-service brokers offer more services than discount brokers – at a steep price. With a full-service broker, much of the work is done by the broker, who provides the investor with personalized advice as well as individualized suggestions and research.

For younger investors, discount brokers are most suitable. This is because it is the most financially feasible.

Minimums 

Typically, the minimum balances for starting a brokerage account is between $500 to $1,000 with an online discount broker.

Margin

Margin accounts incur a higher minimum balance requirement than standard brokerage accounts.

Withdrawal

Taking your money is not as easy as it may sounds when in the game of investing. That’s because brokers sometimes charge fees for withdrawals. Others will allow you to write checks from them, but those typically require a much higher minimum balance.

Complicated Fee Structures

Some brokers may have complex fee structures that render investors more susceptible to hidden charges.

All in all, take your time when choosing your first discount broker. While they won’t necessarily be your broker for life, you have a much higher chance of seeing returns if you do your proper research prior to finding your match.

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