ANSWERS: 1
  • A discount brokerage facilitates investors' trades in the stock market. These brokers are highly competitive with one another, and as a result investors can often buy and sell securities inexpensively.

    Identification

    A broker is the middleman between investors and an exchange, and a discount broker is designed to make the experience fast and inexpensive for investors.

    Types

    A discount brokerage is a less-expensive alternative to a full-service brokerage. Full-service brokerages tend to offer more sophisticated advice.

    Features

    Through a discount brokerage, investors can trade stocks and bonds and invest in mutual funds. Most discount brokers provide investors with online tools, such as stock charts and research. Some provide more hands-on advice than others via telephone and Internet.

    Fees

    Typically, investors subscribe to a package that charges them a flat rate for a number of trades based on their frequency of buying and selling securities. Some discount brokers include a group of mutual funds to invest in, and funds outside that group carry an extra fee.

    Rivals

    Throughout the economic crisis of 2008 and 2009, full-service brokers lost business to discount brokers, according to research firm Aite Group as cited in Investors Business Daily. Discount brokers gained businesses after aggressive advertisements criticizing full-service brokers.

    Source:

    Investors Business Daily: Discount Brokers Gain Ground

    More Information:

    The Motley Fool: Picking a Broker

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