Pros & Cons of an Individual Stock Account

Pros & Cons of an Individual Stock Account
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If you’re interested in investing in stocks, you have a couple of choices to make. You can find a broker and ask her to make investments on your behalf, through her brokerage’s account. Or you can open your own stock account, usually online, and select and trade stocks on your own. You can also open an account at a hybrid firm, where you have your own account, but can pay extra for a broker’s services when you think you need them. Opening an individual stock account has advantages and disadvantages, depending on your investment goals and personal comfort level.


Trading stocks yourself offers you ultimate control. You choose what to buy and when to buy it, and buy and sell as you choose. You make the choice on your own, without the input of a broker, who may try to steer you toward investments with which you’re not comfortable. Some people are more susceptible to this kind of influence than others. If you’re a person who finds it tough to say no, you might prefer to buy stock on your own.


Most online stock trading has low, defined fees for buying and selling stocks. You’ll know up front what you’ll pay to buy or sell a stock, which can make budgeting your investments easier. You may save money compared with the cost of trading stocks through a broker. Brokers have offices, staff and other overhead they pass on to their customers. Brokers often operate on a commission basis, which can make it more difficult to know the costs of making a trade in advance. On the other hand, trading through your own stock account is so easy you may be tempted to make more trades than you would if you had to go through a broker. Even given low prices, you could eat up your profit through frequent trading.


Some people make a hobby of investing. They research extensively, read trade publications and make knowledgeable trades. But not everyone has the time to devote to gaining this kind of in-depth knowledge. For these people, it may make more sense to turn to financial advisers and brokers to guide you in your decision making. They’re paid to educate themselves – and you – about stocks.


With an online stock account, you can buy and sell stock in the middle of the night or the middle of the afternoon. But unless you sit in front of the computer watching the markets all day, you may not always buy when stocks are lowest and sell when they’re highest. Delegating the buy and sell tasks to a broker may net you better prices, simply because their job is to watch the markets for you.