If you’re goal is to start saving and building wealth for yourself and your family, one of the smartest things you can do is to open a low cost self-directed brokerage account. Discount brokers have been around for some time, however not all discount brokers are alike. Today there are many discount brokerage firms which have a plethora of investment advice and information, blogs, forums, and even web cast videos to teach you how to trade and to teach you about new investment vehicles to help you improve your portfolio performance.
In today’s volatile economy, you no longer can choose a couple mutual funds and leave your money there for 20 years. Smart investors know they must continue to learn about the stock market and about alternative investment vehicles. In order to be well diversified, you must have many options available to you at your disposal. The reason for this is that smart investors know how to make money in down markets. For you to learn about the stock market, you must have resources available to you.
A discount broker offers this type of investment information that can help you diversify your portfolio and profit regardless of market conditions. This is not the same as taking extreme risks. In fact, it’s just the opposite. If you spend the time to learn about the stock market, and paper trade for a period of time with some new ideas, you can easily see how you are learning to choose new investment vehicles that could be useful. A successful investor will have many options available to them and not rely on just one or two types of vehicles such as stocks and mutual funds to make money in their account.
While it’s not impossible to make money in a volatile market, it definitely takes some skill and learning. If you have a self directed brokerage account, or a self directed retirement account, you have the option of investing in many different investment vehicles to help build your portfolio. As an alternative if you have your money with a mutual fund company, you would be severely limited in types of investment you could choose, mainly only mutual funds. The problem with mutual funds is that the fees can be high, and fund management may be restricted to the investments they can choose. It also is not easy to get in and out of the mutual fund quickly depending on market conditions. For these reasons having a self directed account can help you buy stocks, ETFs, commodities, options, and futures, and even mutual funds if you choose.
The bottom line is that you want to both give yourself plenty of options for educating yourself about new investment choices, as well as having an account in which you can purchase those investments and take advantage of what you’re learning to build your portfolio and grow it into the future.
