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As a novice trader, the stock market might seem like an endless maze that keeps changing directions. You might feel lost after a few weeks with no one to help you. This is a common feeling experience by most new traders as they jump into this vast ocean called the stock market unprepared.
Before you do so, you should make at least one friend, who will guide you through this maze. These friends come in the form of stock brokers.
Think of them as a guide who knows their way around in the maze. They will guide you, help you and comfort you when you travel through the maze, for a fee, of course.
Advantages of Stock Brokers:
1. Information For Research:
Being a stockbroker, they will have access to more information than you do. Plus it will save you a lot of time if you access information regarding the stock market from your broker instead of doing it on your own.
Any information regarding a stock like company earnings, management, and performance analysis will be available to your stockbroker because he has to cater to a lot of clients. With that information you can conduct your own research and develop a strategy with the help of your broker.
2. Investment Advice From Expert:
Your stockbroker will always act in the best of your interests. Depending upon your financial goals, he will help you invest in the right funds. First, your broker will try and identify your risk appetite so that they can choose the right stocks to invest in. They will then analyze your financial goals.
If you want to save up for your future then they will probably advice you to go for something long-term.
In a long-term investment you will gain because it will help you keep up with the inflation and you will retain your purchasing power when you need the money. Apart from that, stocks perform pretty well as far as long-term investments are concerned.
3. Competence and Experience:
Your broker has to take a test and once he passes that test can he become a broker. Along with that, to be successful as a broker, they have to provide the best services to their clients or they will not be able to retain clients in the first place.
You can always ask your broker to show you their performance so that you can understand how good or bad they are at their game. Provided they are good, their competence is derived from years of trading in the stock market, something a novice trader lacks.
4. Tools And Softwares:
Your broker has at his disposal a large team of stock analysts who use a lot of statistical tools and software to analyze and implement trading strategies.
You can utilize those to consolidate your own trading strategy and pick out stocks you want to buy or sell in the stock market. Without a broker it will be very difficult to procure the stock analysis in question.
5. Tax Planning and Retirement:
If you opt for a full service stock broker (which you should, if you are new to trading), you should be able to avail these services.
These brokers will help you invest in the stock market in such a way that will result in exempted and reduced taxation.
Along with that they will help you budget so that you can save up for your retirement as well, through proper investments in the stock market.