Why You Should Consider Discount Brokers Over the Traditional Brokers?

Choosing between a discount broker and a traditional broker is one of the most difficult tasks for the investors. Here the best way to decide is, ’should I go with a straightforward and cost-effective product or I should opt for the pricier or more-service oriented product.’ It is important to decide which type of brokerage account to open as it is always wise to better understand the options. This can also include the comparison of services, support, investment tools provided and also the cost of communication with fees. This article will help you dive deep into it.

Traditional brokers

A brokerage account allows the customer to sell, buy stocks, mutual funds, and other investments through the broker.

The traditional brokers also known as full-time brokers do more than just selling and purchasing stocks. These kinds of brokers tend to offer a wide range of services and products. This includes financial and retirement planning, investing and tax advice and also regular portfolio updates.

Since the investors are getting personalized recommendations and services, the traditional brokerage often comes with higher fees. The general fees charged on the assets are 1-2%.

Traditional brokerage fees are something that should be considered carefully and that is especially when you are planning to invest after retirement. Therefore, if you do not want to invest on your own and getting professional advice is all you need then a traditional brokerage could be the right choice.

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Discount Brokerages

If you are a fee-conscious investor then basically the discount brokerages could be the best choice for them. There are several brokers like 5paisa that not only help you with the investment advice but also help manage your funds profusely. Such apps are great for those who wish to start with stock trading.

These are the brokers who don’t just give the investment advice but the perfect management and tools to start stock trading. Although, 5paisa is one of the best stock trading app and also, the best discount brokers in India.

There are many discount brokers in India. Every other broker can provide the best tools and services but can even charge higher for the services. It could also be a difficult choice for the investor to choose the best discount brokers in India.

However, the main benefit of the discount brokers is you can entirely manage your trading system using computerized operation. I know some of the discount brokers who charge annually but giving a commission on the sale is far better than considering for the annual service.

Another thing that the investor needs to consider is the minimum account balance requirements. The brokers like 5paisa require minimum account balance for opening an account and you may not believe but currently, 5paisa is one of the second largest discount brokers in India.

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Should you consider discount brokers as compared to traditional brokers?

Now that we know both about the brokers and weighed the services and costs, I think the best option would be choosing the discount broker as compared to the traditional brokers.

Now, you might be wondering what could be the reason for choosing discount brokers over the traditional brokers? The reason is simple and straightforward and it is all about the money we spend on hiring any brokers for professional advice.

If I am a single investor then the discount brokers could be the best choice for me. On the other hand, If I need full-time assistance and advice on the stock trading then I will prefer hiring a traditional aka full-time broker for the service.

Finally, the choice of brokers is completely subjective and I have expressed my personal opinion basis my own requirement, analysis, and understanding of what I believe would suit me or those who have preferences as I do.

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