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INVESTMENT: Choosing the Right Stock Broker for Your Investment Needs
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Most people know what stocks are. A lot of them also understand how they work, why they make sense and how owning shares in the right company can be the best way to secure their financial future. Getting the right brokerage firm to facilitate your investments is crucial. When searching for a stock broker, investors should always consider the four key factors: costs, market exposure, the broker’s credibility and their quality of customer service. Let’s take a look at why these aspects are so important and what options are out there to suit your investment needs…
 
Low costs = more money in your pocket
 
It goes without saying that you don’t want to get stung with hefty transaction charges and management fees whilst trying to create a financial empire. Costs vary significantly from broker to broker, and if you make the wrong move you can end up paying a massive chunk of your profits out to these greedy money movers. 
 
When it comes to paying charges to a stock broker, it usually depends on what kind of service you want. Traditionally, individual investors went down the route of opening an account with a popular brokerage firm, and would sign up for a costly package with all transactions done over the telephone. If you want to pay for the privilege of speaking to an investment advisor whenever you are considering a trade, most firms will be happy to oblige. But be warned, you will be paying a substantial price for the service and added to that the advice you receive may be influenced by the commission rates given to the advisors.
 
Most banks around the world offer their customers these kinds of service. They will help you to build a portfolio which is geared towards the long term protection of your finances. Barclays and Nat West are two such examples in the UK, whilst the big American banking groups, such as Goldman Sachs and Bank of America Merrill Lynch, all offer stock options through their wealth management arms of the company. If you are dealing with large sums of money and you are willing to sacrifice some of it to access elite investment advice, going to your bank may be the best method for you.
 
However, by far the cheapest and easiest way to invest is via a relatively no frills online account. Accounts of this kind are usually labelled ‘execution only’, which do exactly what they say- place trade orders without any advisors or intermediary and have very little in the way of flashy analytical tools. If you are willing to do your own homework before you invest and just need a platform which allows you to easily buy or sell stock, there are some incredibly cost effective options out there. For instance, UK based investors can take advantage of X-O’s online execution only account- which charges a flat fee per trade of just GBP 5.99, no annual management fees or commission included. Likewise, there are dozens of similar brokers in the US which will save you tonnes of cash. Trade King, Lightspeed Trading and Optionshouse are all ‘cheap and cheerful’ investment platforms.
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Gaining exposure to international markets
 
Your choice of broker will also depend largely on where in the world your target company’s shares are traded. Although charges are inevitably higher for international trades, the opportunities that are unlocked when you have access to emerging market stocks make the costs worthwhile.
 
Interactive Brokers is one of the biggest household names in the investment world. Through their international trading accounts customers can access 16 markets around the globe: Australia, Austria, Belgium, Canada, France, Germany, Hong Kong, Italy, Japan, Mexico, Singapore, Spain, Sweden, Switzerland, the UK and the USA. The main snag with using IB’s service is the USD 10 per month commission charge, which eats away at your nest egg over time. A great alternative with a very similar repertoire of options (notably minus Japan) is TD Waterhouse. TDW’s prices are transparent and straightforward with a standard flat fee of GBP 12.50 (USD 19.50) per trade. In addition to the friendly price scheme, customers can enjoy the superb online platform and excellent customer service that TDW has to offer.
 
Another broker worth mentioning is Saxo Bank. They offer relatively low commission charges, give customers exposure to niche European stock indexes such as Norway, the Netherlands, Portugal and Poland, as well as South Africa and other burgeoning global markets.
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Finding a credible broker with a good reputation for customer service
 
You can never be safe when it comes to your money. Not only should you look for a company which offers you peace of mind and a track record of operating within the law, you would also be well advised to go with a firm which has a sound reputation for its customer service. Here are some general guidelines for selecting a reliable and secure stock broker:
 
• Ensure that they are registered and approved by the relevant legal and financial regulating bodies the country of which they operate in.
• Spend some time browsing through online forums to find out what other people’s experiences have been. If you see any warning signs, take notice.
• Before getting into an agreement and transferring funds to your account, be sure to read the terms and conditions very carefully. Pay close attention to the charges and the procedure for reclaiming your funds.
• Make sure that the brokerage firm has a customer service helpline. If you want to be extra careful, give them a call and clarify any issue that you are unsure of before you make any deals.
 
Some of the most reputable stock brokers with great reputations for customer service and value for money, apart from those already mentioned, include Scottrade, an American firm with a good cost structure and a wide range of investment products, TD Ameritrade, which was ranked no. 1 online broker 2013 by stockbrokers,com, Etrade and OptionsXpress.
 
Investment News
 
Stocks and Shares
 
Global stock markets continue to surge towards historic highs 
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In what has been one of the most unusual and seemingly unshakable global equity rallies in decades, many of the world’s most valuable indexes are continuing towards, or are already reaching new historical highs. The Dow Jones Industrial Average continued past 15,000 in May, setting new all-time highs. Tokyo’s Nikkei  225 Index and the FTSE 100 are also trading at 64 month and 12 year highs respectively. Despite the rampant bull market, however, economic fundamentals around the world remain weak going into June, leaving investors and market analysts puzzled as to why global equities are performing so well.
 
Goldman Sachs  sells its stake in China’s ICBC
 
Investment banking giant Goldman Sachs sold their last remaining shares in the Industrial and Commercial Bank of China (ICBC) in late May. Analysts are suggesting that the performance and levels of transparency at ICBC in recent years has been far below what Goldman had expected, and therefore the firm have opted to liquidate their holdings now in order to boost their balance sheets ahead of new capital requirements in the US.
 
Yahoo undergoes big shake up to boost investor confidence and profitability 
 
Yahoo! Inc. has been struggling to maintain its sizable market share for some years now as the ever competitive tech sector continues to evolve and new players enter the field. Under CEO Marissa Mayer, the company is undergoing a shake-up, and has recently announced its acquisition of blogging site Tumblr for around USD 1.1 billion. Despite the energy coming from the company’s leadership, investors are still sceptical about Yahoo’s long term sustainability. One big investor in Yahoo! Inc. stock went on record as saying “the core business is a lottery ticket… Investors' expectations for the core business are very low, so if they're able to reinvigorate growth, that will move the needle”.
 
Investors start to get cold feet over ENRC  buyout saga
 
The FTSE 100 mining firm recently announced that the Kazakhstan  government were using their political and financial muscle to contribute towards a major takeover bid by ENRC’s rivals Kazakhmys. The firm, which has seen an array of boardroom resignations, firings and fraudulent activity in the last year or so, has essentially been given an ultimatum by the already controlling consortium of Kazakh oligarchs. The bad news for common shareholders is that the value of the already troubled stock could head even lower until a deal is done.
 
Investors encouraged by Burberry’s  announcement of 14% rise in profits
 
British luxury products group Burberry, which is one of the biggest publically traded fashion firms on the globe, recently boasted a 14% rise in full-year profits. The exciting news for investors comes at a time where retail companies, particularly in the UK, are struggling to maintain their profitability amongst a backdrop of weak consumer demand. Burberry is said to have increased its market share and profitability in the Asia Pacific region, which accounts for around 35% of its total client base.
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The weakening of the Japanese yen finally looked to be running out of steam towards the end of May. The currency, which has shed a significant amount of value against the dollar in recent months, looks to be stabilising after warnings from the country’s Economy Minister Akira Amari that further weakening of the yen may put the economic recovery in jeopardy. There are also some signs of bullishness for the US dollar as the world’s biggest economy looks to be heading towards an increasingly robust recovery. Whilst the yuan continued to strengthen in May, more analysts are starting to question whether the long term appreciation of the Chinese currency is a one-way bet as the country’s economic outlook remains fairly weak due to a slowdown in GDP and ongoing concerns over the real estate sector. 
 
May was a tough month for commodity companies, shareholders and futures investors. Due to factors such as weak demand, rising costs and increased competition, many oil firms around the globe are looking to focus more their non-core sources of revenue, such as drilling for gas and power generation. An oversupply of diesel in Asia has brought prices in the region down significantly, and with recession-ridden Europe being the only continent with a shortage of the fuel, the outlook for 2013 looks bleak. 
 
Gold and silver have also been heading lower in price as investor confidence in the US dollar continues to improve. At one point in mid May, gold prices dropped in 7 straight sessions for the first time since Mach 2009. With the US economy seemingly getting back on track, and with more talk about interest rate hikes, it is not overly surprising that speculative commodity investors are tentative. 
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By Josh Cooper
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