The first step of starting your investing journey is to decide which platform to use. Here we will take a look at both of them, so you can make the right decision.
Why Use A Broker?
- Usually cheaper than using a bank
- Better currency exchange rate (Usually)
- Provide better market coverage (Especially IBKR got global coverage)
- More features such as trailing stop, longer GTC order and more
- Separate from your personal account to better manage your investment
Why Not To Use A Bank?
The following might not apply to all and it totally depends on which bank you use, however, it is usual that they charge:
- Account maintenance fee
- Transaction fee
- Not the best currency exchange rate (I treated it as a hidden fee)
The worst part is that **most bank fees are charged based on your account size in percentage.
In other words, you are being charged more for having more money in the investing account. This is not happening in brokers.
When To Use A Bank Then?
To give a fair bit of edge to local banks:
- Saved time transferring money between bank and broker
- No transaction or exchange fee if you have mainly US dollars in your account
- A sense of reliability (This is arguable because you see HSBC is a huge bank, but their balance sheet might not be as good as a sole medium-sized broker right now)
You have a large sum of money and have exceeded the SIPC-insured amount. So you use multiple brokers for different uses.
Read Also:
Here are some brokers that I recommended.
