Do you want to earn more in less time and at less transaction cost? If yes, discount brokers are one way to accomplish your goal. With the advent of FINTECH and quick access to online information, discount brokers have become prevalent among investors, catching the traditional broking industry off guard.
Brokers
who carry out buy and sell orders at reduced commission rates are
called discount brokers. They offer useful generic advice via
websites, help desks and newsletters for those who want to do their
own research. Unlike other brokers, they have no vested interest in
trying to lure the customer to buy a certain stock and don’t offer
any personal consultations, advice, and research to customers.
Therefore it is beneficial for experienced investors, who wish to buy
investment funds such as unit trusts, to deal with discount brokers
in order to achieve substantial savings by getting a rebate on
commission on bulk orders. The downside is that discount brokers,
unlike independent financial advisers (IFAs), are not permitted by
the regulatory authorities to give advice that takes your individual
circumstances into account.Thus, if you don't have time or expertise
to pick stocks then the low brokerage subscription of a discount
broker will not help much as meager trading decisions can result in
much higher losses. Moreover, in addition to commission charges they
charge, some hidden fees are also there.
It
is quite difficult to tell, which is The
Best Discount Broker in India?
This is so because there are numerous service providers who are
offering similar services at competitive pricing. All of them are
getting prevalent among the traders owing to their low, fixed
brokerage plans wherein they charge a fixed brokerage fee
irrespective of the trade value.
The
next question that comes in one’s mind is how they are able to
cover their costs? How they charge such low brokering fees? The
answer is digitalization. Unlike other traditional brokers, they
offer services online and have a very limited physical presence which
helps them save money on employees and infrastructure. Also, they
don’t provide research services which in turn saves their cost of
licensing and human resources.
To
conclude, no doubt discount brokers are becoming popular at a high
paced rate. Their low commission charges and virtual facility makes
them both affordable as well as accessible. However, for those who
have any doubts about their capability to make their own investment
choices or seasoned investors who do not have time to do their own
research, paying some extra bucks is worth it if it prevents them
from making expensive mistakes. Overall, the effectiveness of
discount broking depends upon the investor to investor. A full time
broker will guide you about daily tips and where to invest. This will
help you to continue with your busy life and your money keeps on
working itself. So the option to choose between discount broker and
full time broker lies with you. Just you need to study your
requirements.
