Which brokerage is the best for dividend investing?
2 min read
This question is a really hard one for many out there
because it isn’t easy to change after a month or two if you don’t like it. It
isn’t like changing your e-mail address so better take your time and choosewisely!
Unfortunately, there is no brokerage that could fit everyone
but I will guide you a little bit on which can be the best for dividend investing.
Let’s begin
Why do you need a brokerage account? These firms are the connections between us investors and the stock exchange. Only through them is possible to buy ETFs, stocks, and so on.
I cover in more detail the different financial instruments in by eBook “How to Make Money While you Sleep“.
The first important question is, what is your goal? –
Speculative tradings, short trades? – Long-term investing? – Stocks and futures
to buy?
Side note:
Be aware of brokerage which is promoting themselves everywhere and wanna give
bonuses to join them and so on. Normally there are hidden costs that will
reveal themselves later on.
I prefer to choose a brokerage outside of my country. – More
stocks and ETFs to choose – More likely to find cheaper fees – Better platforms
and better diagrams/charts that you can draw with their website/app
What to look for about the brokerage:
– What do they offer? I mean do they offer only
access to the American stock market or also to the European and Australian for
example? How about the ETFs?
– In which country do they have their headquarters?
It is good to know which language we have to use if we have any trouble with
the firm and secondly what about the investor protection fund? We have to have
good trust in the company and the country. There were already many troubles
throughout Europe with brokerages that’s why take a look at how much is the
company’s investor protection fund per person.
– Other things to take a look at: How old is the
brokerage? Do they have many trustworthy old customers? Do they have a bank in
the background?
– Do they offer different tools for the investors to
work with?
– Maybe something to study from?
This was about the basics. What else do I find interesting
when it comes to dividend investing:
– No account management fee. It is important when you
want to leave it alone to just grow your portfolio from dividends and not buy
stocks/ETFs or deposit cash.
– Obviously the overall buying fee/transaction.
– When you want to withdraw money from your account
it has to be also free.
– Crediting dividends has to be also free.
– Inactivity fee zero for the same reason as the
account management fee.
– Investor Protection Fund
Best brokers for dividend investing
I live in middle Europe so will compare and write a few
words about the brokerages which are available for everyone in Europe. Focusing
on dividend investing!
Just a few closing words but not about all brokerage
accounts…
1.
Tradestation US
Founded in 1982, insured by the protection fund up to
500.000$, a bit expensive but if you have a massive portfolio then it is better
to put your money into a brokerage like this for the protection that you get
with them.
2.
Saxo Bank
Founded in 1992, a Danish Investment Bank has a very wide
product range, is expensive, and is not for beginners.
3.
Tastyworks
Inexpensive American brokerage with the $500.000 Protection
Fund, a clear and simple platform.
4.
Etoro
It aims the beginners mostly, Cyprus Stock Exchange
Authority, the NOT trading fees could be expensive.
5.
Interactive Brokers
One of the famous brokerage firms. They removed the
inactivity fee and the minimum starting amount so it can be a perfect lifetime
brokerage account, a strong company after all.
6.
Lynx, Captrader
They are like small brothers and sisters from Interactive
Brokers, service comes from IB.
Closing Thoughts
As I said the perfect brokerage doesn’t exist. Everybody
wants something different, and it depends on goals and situations.
Choose a brokerage account where you can accomplish your
goals cheaply. I personally use Captrader because I wanted to have an
international account and not a Hungarian, I think my money is safer out there
with that background.
I opened my account there because at IB there was still the
minimum starting amount and the inactivity fee that’s why I chose Captrader.
I would consider also Etoro if you are comfortable with the
Cyprus Exchange Authority and for the bigger guys, Tradestation would be a good
idea with that Investor Protection Fund.
