A lot of people are discussing about discount brokers and you have to be a dummy not to be paying any attention to them. Yes discount brokers are easy to understand and personally I agree to it. In the days gone by it used to cost an arm or even a leg to purchase a stock. For this reason if you had limited money it was virtually impossible to purchase stocks. In the decade of the 1970; s the discount Brokers in India emerged and went on to rock the world. They changed the landscape of investing and before we precede ahead let us understand what discount brokers in India are.
The definition of a discount broker
They are brokers who buy or sell stocks at a fraction of a price as compared to the full time brokers. They are going to provide you with services that you would be instructing them to do so. It is going to be nothing more or less and do not expect any type of advice from them. Even the popular discount brokers are not expected to give any advice. They are firms who are merely going to execute trades on your behalf.
On the other hand regular stock brokers or the full time brokers are expected to provide you with investment advice. They are bound to make direct suggestions to you and for this service they are expected to charge a rate of commission from your end. Even the commission they charge for the stock they recommend could be as high as 2 %. Though you could be trading a few times in a year you can figure out on how expensive they work out to be. In addition they try to sell your investments as they can earn hefty commissions on the same.
They go by the name of proprietary funds and this is a big cause of worry. When brokers undertake such a practice it is a worrying sign as they are more worried about the amount of money they are making and not allowing the investment to be working for you. In the long run this could pose to be a major issue and this could be one of the main reasons why people are leaving full time broker and switching over to discount broker.
The benefits of a discount broker
Not only it saves a lot of effort, discount brokers go on to ensure that they do the best, and do not complicate things by providing a lot of investment advice.
For the right investor, the right discount brokerage could deem to be the perfect fit. Once you do not need any form of investment advice there are a couple of ways by which you can achieve this and still cash in on the power of discount broker.
Eventually in the end analysis the choice of a broker depends upon what your investment needs are in the first place. You can choose a full time or a discount broker as per your needs.