subject: How To Choose The Right Stock Broker? [print this page] Every one actively seeks advice from brokersEvery one actively seeks advice from brokers. Stock brokers suggest on how you should shape up your portfolio. Your portfolio is made of different securities; they are your different types of investments.
The portfolio has to be structured on the basis of how frequently you require the income flows and the capital return. The composition of the portfolio also depends on your age, status in life, other sources of income, risk bearing capacity, etc. Its wise not to put all your eggs in the share market alone, as it can, at times, be a most risky investment. Persons with fewer social obligations can afford to put more money in the share market, whereas a senior citizen could allocate just 5% of his wealth to shares. Everyone needs to spend time to build a portfolio that suits their individual needs.
The aforementioned suggestions should come from your stock broker. It is very important to remember that the brokerage house or the individual stock broker should be a registered portfolio adviser. If he or she is not a registered portfolio adviser then he or she will not be able to track your portfolio. He or she will merely share with you a scenario that would only show you the current favourites and the trends of the season. There is a high chance that if the broker is not an experience hand then he would only be interested in short term gains. A broker always stays updated on the market status and is affected by short-term price movements and fluctuating sentiments of the market, in case of a green horn, volatile movements may make them draw wrong conclusions. A good brokerage house should have a full-fledged research department in the absence of which a broker is unable to do in-depth study and provide a long-term view about different stocks.
A very important reason that makes a common investor seek the help of a stock broker is the fact that they trade in heavy volumes and this entitles them to allocations of special issues, convertible notes and IPOs, which is not available to a common investor. Stock brokers offers an opportunity to posses massively undervalued IPO stock or get high earning notes.
Always remember that it is your own money, so it is advisable to keep a check on your own portfolio. A broker will only give signals, but the final decision needs to be taken by the investor himself or herself. Even if a share has been bought on a brokers advice, it is necessary to dispose it when you have achieved your targeted return.
