V.3:3 (114-116): Discount Stock Brokers by Richard Maturi

Discount Stock Brokers by Richard Maturi

If you're a sophisticated investor, willing to make many of your own investment decisions then May 1,1975 marked a milestone for your investment activities. On "May Day" the Securities and Exchange Commission ended fixed commissions, making brokerage commissions fully negotiable.

Many discount stock brokers came into existence after May 1, 1975 offering investors exceptional money-saving rates. Discount brokers can offer commission savings on orders for three reasons:

1.Their staff is paid on a salary basis, therefore no large commissions are incurred.

2.They do not provide investment advice, therefore they incur no heavy marketing and research costs.

3.They use specialized clearing agents whose large operations provide economies of scale.

A trader must keep his commissions to a minimum if he is to maximize his profits. Discount brokers provide an easy and efficient method of accomplishing this goal.

I'm sure many of you reading this article are thinking, "So what else is new, I've been dealing with a discount broker for several years now." That is just the point. There has been such turmoil in the discount brokerage business and there is such a wide range of options and prices provided by discount brokers that another look is warranted. You may be satisfied with your present broker but still be missing opportunities for more services at the same price or lower commissions by making a switch in brokers.