Dec 03
Investing tip: What you don't need from a brokerage
Online brokerages market themselves in lots of ways. Here are things they use to attract investors which you should ignore:
You don’t need real-time or streaming quotes. You can buy index funds and exchange-traded funds using limit orders. If you want real-time quotes when you enter your order, you can get real time quotes from Yahoo for free. Streaming quotes, or NASDAQ Level II quotes? You’re not a day trader. You don’t need to check your portfolio every day, let alone every second.
You don’t need stock research. You shouldn't buy individual stocks because you won't get enough diversification if you do. So you don’t care whether your brokerage provides stock research.
You don’t need a choice of mutual funds. Why? Because mutual funds are generally a lousy deal, and you should buy ultra-low-cost, index funds or exchange-traded funds instead.
You don’t need cheap margin interest. Your goal is to allocate the assets you have, not to borrow money from your brokerage to buy stock. Since you won’t be borrowing, you don’t care what your brokerage’s margin interest rates are.
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