You?re ready to open up an ISA, but you?re not sure where to begin. Most people don?t. That?s OK. What?s not OK is to sit on your hands and do nothing about it. Here?s how to get started finding the best broker for you.
Choose a Flexible Broker
No one wants an ISA where they can only hold cash – cash if fine, but it?s not the perfect investment. So, the first thing to look for in your broker is flexibility. Do they offer you the choice of funds and investment trusts? If they do not, then what you need to look for is another broker.
If you can?t seem to find a broker with flexibility and investment options, go with a SIPP – a Self-invested personal pension. This is a special type of account where you can direct your own investments. Within some ISAs and SIPPs, you can invest in more complex investments, like stock options and forex. If you?re interested in forex, this forex trading platform, by Alpari, is a good place to start. For most other alternative investments, Interactive Brokers is a good place to start.
Always be forward looking with your broker. In some important ways, your investment broker is more important than your banker. Choose a provider that you think will grow with you as your needs evolve. If you enter into a relationship with a broker that only offers cash ISAs and maybe a fund option, but the funds are limited, this probably isn?t going to work if you want to become a seasoned professional.
Haggle Over Charges
Just because a broker charges a fee for a particular service, doesn?t mean that fee is set in stone. Some fees can be changes, and haggling is one way to force the issue with the broker. If you?re? a loyal customer with a lot of funds, you may be able to get a deal on commissions and other non-regulatory fees charged by the firm.
Try Before You Commit
Cost isn?t the only consideration when choosing a broker, even though many people believe it is. When looking for a brokerage firm, focus on a combination of quality service and cost. What good is a discount broker, for example, when there are constant problems or slow execution of orders?
Understand All Of The Charges
Too many people have become complacent about fees and it?s killing the industry on the consumer side. Always, always, always look out for fees. When you invest, there are a few common ones to be on the lookout for.
First, there?s the commission or spread charged by the brokerage. This is the fee that pays for marketing, sales, and service. You want this to be low, but not so low that it hinders service. The other fees include fees for the funds.
Now, these fees aren?t always obvious, and sometimes they must be reverse-engineered before you know what you?re really paying on net. In general, however, if you have a smaller account with ?50,000 or less, then Charles Stanley Direct or Cavendish are probably good brokers for you to check out. If you have more to invest, Interactive Investor, A J Bell, and Alliance Trust Savings are good brokers.
Janie Pruitt is a retired bank manager and finance consultant. Whenever she gets some time, she sits down and shares her insights on the investing and finance world. You can find her helpful articles mainly on investing, finance and money websites and blogs.