Is Discount Broking Really Cost Effective



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.