It’s quite possible that by the time you’re reading this you already have a brokerage account.
If that’s the case then I don’t want everything that you read below to freak you out.
Don’t press the panic button and jump ship, but you’ll start to see what you should look out for with certain brokerages.
If you don’t already have a stockbroker, it’s an account that allows you to buy and sell stocks.
First, let’s talk about the untalked elephant in the room:
Stockbrokers aren’t out there to scam you.
If you’re scared of transferring your blood, sweat, and tears to a stockbroker and having it all eaten up by those transferral fees, administration fees, management fees, securities holding fees, and a ton of other hidden fees —
I feel where you’re coming from.
Stockbrokers have a long history of charging outrageous prices, making applications ridiculously complicated, and not offering the best service.
And because of this, investing was not accessible to the average Joe.
People would end up not investing until their 30s or 40s just because it was not easy.
Then virtual brokerages that provide electronic, app-based trading services like Robinhood and Webull came along and they revolutionized the entire game by charging NO FEES for buying and selling stocks.
This opened the door to investing for the masses and was no longer exclusive to the rich or institutional investor.
Other “traditional” brokerages were forced to adapt to the competition and ever since then it has been an arms race to see who can provide customers with the best value.
Together with enhanced oversight from regulatory bodies such as FINRA since the 2008 subprime mortgage crisis, stock brokerages operate at the level of safety in line with banks.
So opening up a stock brokerage account has never been safer and easier.
What To Look For In A Stock Broker?
So if you’re brokerage shopping what should you look for?
Many beginning bloggers solely look at the freebies they’ll get.
They see an offer of 2 free stocks valued up to $1,400 and they jump right on it.
You know what I’m talking about.
Or they look at whether the interface is user-friendly or whether their app is well-designed.
The problem is that not all brokerages provide the same protection for your assets (stocks, cash), and when you find out (AKA when your money is lost) it’s always too late.
You must use a brokerage under SIPC protection.
What is SIPC?
This is known as the Securities Investor Protection Corporation.
The SIPC started after the 1970s when a bunch of stock brokerages failed and broke their promise to the investors to safeguard their assets.
That’s when investors lost trust in brokerage firms.
The SIPC came around to instill confidence back in the industry by providing guarantees for investors’ stocks and cash.
They provide up to $500,000 of insurance protection for brokerage accounts held in member firms, of which $250,000 can be cash.
So in the unlikely event that your brokerage firm goes bankrupt, your assets are SAFE.
As long as your stockbroker is a SIPC-registered member and your assets are within the insured limits.
Your stocks and cash will ALL be transferred to another registered brokerage firm for you to continue your investing activity.
All $500,000 protection is at no cost whatsoever for the investor.
You might think now that you won’t need any insurance protection.
You’re just planning to start small and your investment portfolio isn’t going to blow up to anywhere near $500,000.
You just want to get the 2 free stocks and a chance at winning the lucky draw when you sign up.
But trust me, because you’re awesome and you’re going to do awesome things with all that we’ve been talking about before, you will probably grow out your net worth nicely.
Slowly but nicely.
Go check whether your broker is SIPC-registered.
If it’s not?
Get out.
NOW.
Which Stockbroker Do I Reccommend?
I get asked a lot which stockbroker to choose.
I suggest that you do some research on your own and take whatever you read with a grain of salt.
The name of the game is affiliate marketing so many people will just pimp whoever is offering them the best deals.
Through my experience and the dividend growth investors I’ve helped, I’ve found that one of the best stockbrokers is Webull.
Yup, that’s a referral link.
It’s there because hopefully after all this information we’ve developed a little bit of trust.
Like I said through my experience I’ve found that Webull is one of the top stockbrokers and here are the reasons:
1. SIPC-Protected.Period.
2. Paper trading.The feature I love most in Webull is paper trading.
Once you’ve activated this feature — BOOM — you now have a net worth of $1 million dollars.
There you have it — the only financial hack you’ll need from this entire guide.
Jokes aside, paper trading is an investment simulator, which I’ve not seen on any other apps.
You can configure the initial starting amount of cash specific to your situation.
You can then go through your company analyses using the Dividend Lab Manual, buy and sell stocks, construct your dividend growth portfolio, and see how things might play out.
All these happen virtually with your virtual $1 million net worth.
And all without the paralyzing worries, fear, and anxiety of losing any money.
I know it took me a long time to get over my own emotional doubts when I was new to investing.
So this is such a thoughtful tool to help beginner investors master that emotional hurdle when they are just starting out.
What paper trading empowers you to do is to GET INVESTED.
Once you’ve gotten the hang of things you can feel much more confident investing with your real money.
3. All These For $0 Fees And No Minimum Balance.As promised since its entry into the market, Webull is a true low-cost brokerage.
$0 trading fees are a given in this day and age because of it.
And while almost all other brokerages have followed suit, there are still some hidden costs.
Some have turned to implement a minimum first deposit to activate your newly opened account.
Even worse, you’ve got to maintain that minimum amount afterward just to keep the account in operation.
Charles Schwab is one such example, requiring at least USD 25,000 of initial funds just to qualify for opening an account.
I mean, who has a random $25,000 lying around in their bedroom?
That’s certainly a cost and a barrier to simply start investing!
A huge one, might I add.
Webull, on the other hand, does not have a minimum balance requirement.
You can have zero dollars in your account and nobody will give you any piss about it.
Don’t just take my word for it, though.
Do your research and if you do find that you want to give Webull a chance I’d appreciate it if you use this link.
If you’re wondering who I use then that would be Charles Schwab.
No, that’s not an affiliate link.
They don’t even have an affiliate program because they don’t even need one.
They’re that good.
Here are a couple of things that I love about Charles Schwab:
1. SIPC-Protected.Period.
2. Superb Customer Service. I use Charles Schwab and I got to say as a customer: they put their customers first.
There was once my fund transferral of $10,000 got delayed by 1 working day.
I know right?!
Or so I thought.
I called Charles Schwab’s customer service and John at the other end of the phone picked up within 3 rings.
I can hear him click away on his computer and then reassured me that it has only been 1 working day since the transfer and the funds will be available for trading on the second working day as promised.
And I was calling from Hong Kong (I’m a Hong Konger if I’ve missed that in the intro).
And it was probably 3 am in the States when I called.
That’s all I have to say about customer service.
3. Comprehensive Research / Financial Education Services.Charles Schwab offers their own research reports for most, if not all, of the companies out there.
They also offer online educational materials on different investment strategies and concepts.
As if all these are not enough, they throw in analyst reports from well-reputed companies such as Morningstar and CFRA, which usually require a rather hefty subscription fee to access.
I use these analyst reports extensively in my Dividend Lab Manual system as I’ve mentioned on the previous page and you can see them in action here in this YouTube tutorial.
Yes, the initial deposit of $25,000 USD to qualify for an account opening is a pain in the butt.
Of course, I didn’t have a random stack of $25,000 USD from the start.
I myself began with Interactive Brokers (and I don’t recommend them) and Webull, then slowly accumulated my stash to move over to Charles Schwab.
I trust that you’ll get there sooner or later.
But there’s nothing stopping you from starting your dividend growth investing journey right now.
So I’d encourage you to start with Webull first and then transfer over to Charles Schwab later.
Next up?
It’s time to buy your first dividend growth stock.
Continue