Stock brokers in a nutshell
While property investment is a great way to build up your retirement funds as well as improve your current income, to create a truly successful investment portfolio you've got to diversify. One alternative asset you might consider is stocks.
There are two methods for accessing stocks. One is buying stocks directly, and the other is using a managed fund to get access. There are pros and cons to both methods, so consult a financial planner first and do your research.
If you decide the direct approach is the way to go, you'll probably have to use a stock broker. Allows us to explain who they are and how they can help you whether you're in Airlie Beach, Bowen, Collinsville or Cannonvale.
What is a stock broker?
A stock broker is an agent you hire to buy and sell shares on your behalf. Stock brokers charge a fee or commission for their services, and they are experts in the share market. There are typically two types of stock brokers: Discount brokers and full service brokers.
What is a discount broker?
Discount brokers – also called online broking services – are the more affordable option in terms of broking. You will simply use them as a medium through which to purchase stocks of your own choosing, giving you full independence over your decisions. They only charge when you buy or sell a share, and according to the Australian Securities and Investments Commission, the fees start from $30.
What is a full service broker?
A full service broker doesn't just buy and sell shares for you. They will also provide you with advice and guidance for what kinds of stocks you should purchase. You'll have the final say in where your money goes, but it might help to have the expertise of a professional in your back pocket.
Because they offer a more thorough service, they also tend to charge a higher price. They will usually charge a percentage of the profit. The exact percentage varies depending on the size of the transaction.
How do I find a broker?
One way to get in touch with a broker is to use ASX's online "Find a stockbroker" tool. Be sure to compare the kinds of fees different brokers you find offer. Alternatively, speak to a financial planner and see if they can recommend anyone.