Factors to Consider When Choosing Your First Stock Broker

You need a stock broker to start investing in the stock market.

You need a stock broker to start investing in the stock market.

If you’re planning to invest in shares, you’ll inevitably need a stock broker, who carries out the actual buying and selling of shares for you. There is just no way around it.

However, it is not so simple to pick a broker, unfortunately you can’t just choose the one who charges the lowest fee. Although the brokerage fee is one of the key factors, there are various other factors to consider. In this article, iMoney explains you some of the important points that should be considered when you are choosing a stock broker for the very first time.

Stock Brokerage Fee

Whenever you buy or sell shares, your stock broker charges you a brokerage fee. For new investors who tend to have limited funds, every cent is important and thus it would probably be best for you to look for brokers with lower fees, instead of a broker charging a premium for services that you may not even use.


The cost difference between a broker who charges 0.1% on every transaction and a broker who charges 0.6% is SGD250, if you want to sell or buy SGD50,000 worth of shares!

In order to find out which broker has the lowest fee, you should check out iMoney’s share trading account comparison table.

Margin Accounts or Cash Upfront

When you open a share trading account, depending on the broker, you might have the option to choose between a Margin account or a Cash Upfront account. For margin accounts, your brokerage fee is typically higher but your trading limit is multiple times the value of shares held in your account or multiple times of the amount of money you’ve deposited. For Cash Upfront accounts, the brokerage fee is typically lower, but trading is limited to the amount of money you have in your account (i.e. if you have SGD1,000 in your account, you can only trade SGD1,000 worth of shares).

Regardless of what kind of investor you are, it is very important to choose a broker that offers you the account most suitable for your investment strategy.

Minimum balance requirement

A lot of stock brokers require you to put down a deposit and to hold a minimum balance in your account. This minimum account balance may range from SGD1,000, to SGD5,000 or more, depending on your financial profile. If you only have limited funds for investment purposes, your best bet is to choose a broker with no minimum requirement at all or at least one with a very low minimum requirement.

Online Trading

While some investors prefer to work closely with a stock broker for share trading, a lot of new-generation investors switch to online trading. That way they can personally oversee their trading activities and execute them themselves. If you belong to the second category, it might be best to browse through the web and online forums to find out other user’s opinions about the online trading platform of the broker of your choice. Keep in mind that online trading accounts are charged with lower fees by most brokers in Singapore.

Withdrawal of Money

You should also put some thought into how you would like to withdraw the money from your share trading account. If you choose a bank’s brokering division, you might only need to make a simple phone call or tap on a button online to have your money transferred to your savings or current account. If you choose to go with a securities firm, this process may be longer since it sometimes involves cheques that have to be paid into your bank account. But either way, you’ll get your money eventually. However, the speed of the withdrawal is different and this might be an important factor for certain investors.

Reputation and Reliability of Stock Broker

When you are going to trust someone with a large amount of money, you should always find out how reliable that person is. Bank brokering divisions are mostly trustworthy because they are tied to the banks themselves. However, that doesn’t mean that securities companies, particularly the big ones, aren’t reliable as well. A smart approach would be to ask a more experienced or established share trader about his or her experiences with their own broker. If you don’t have that sort of network, just keep in mind that you could just browse and look for this information online.

Want more information about share trading in Singapore? Find out how to start trading shares in 4 simple steps.

Ready to start investing in shares now? Then check out iMoney’s share trading account comparison table and find out which stock broker suits you best.

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