Advancements in technology has made investing in the Nigerian stock market easy, allowing investors to manage their portfolio from the comfort of their homes and on the go.
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But just like dealing with a physical stock broker, investors have to be cautious when choosing an online broker. In this write-up we will be taking you through, 5 questions you must answer before choosing an online broker.
Is the online broker Accessible in Nigeria?
As an investor, especially as a beginner, avoid getting carried away by choosing a popular online broker.. Because not all online broker platforms are universally available. Always check if the platform is available in your country, before committing. check out Online Brokers in Nigeria
What are your investment needs?
Precise and honest answers to the following questions will give you a clear understanding of your investment needs;
- Why are you investing?
- What motivates you to invest?
- How much do I know, and how much am I willing to learn about stock investments?
- Do you plan to manage your portfolio yourself or will you need professional help?
- What is my level of expertise?
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What fees does the Online Broker charge?
Look into the platform’s payment plan, and how much can be maintained in your account per time. And this differs from one online broker to another. Two main fees paid on an online broker platform are;
Investors pay the brokerage fee to keep the investment account open and can choose to pay it on a monthly or yearly basis, depending on the payment structure of their chosen platform. And management fee which is only applicable to accounts managed by professionals. It’s important to keep an eye out for hidden charges on your account, as they could accumulate over time and significantly reduce your profits.
Does this broker align with my investment portfolio?
Choose an online broker that aligns with your portfolio goal. Don’t choose an online broker who deals with limited assets. There are majorly three types of online brokers;
Full-service broker offers personalised investment advice and recommend stocks. A good choice for beginner investors. However, due to the level of commitment on the broker’s part, significant charges are involved.
A Discount Broker only executes an investor’s trade order, suitable for more advanced investors.
Robo-Advisors give financial advice to investors based on data collected on investor’s goals, and risk tolerance. This is suitable for beginner investors.
Are there effective regulations in place?
The online broker you choose must have adequate protections and regulations in place. So, you are assured your investment is safe. Look out for additional security measures like two-factor authentication.
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