Thursday, May 25, 2006

Following a stock broker or DIY investing

Ok, ok, I have been investing in the stock market for a couple of years now. Through this time, I have been assisted by a stock broker from Macquarie Bank; now there is a lot of conjecture as to the cost / value of using a stock broker over do-it-yourself (DIY) self-service share investing (e.g. e-Trade, Comsec). Ok so what are the costs?
  • 1.25% on every trade both buying and selling
Yes thats it! Note, there are no management fees, ongoing maintenance fees, or commission related fees if the investments outperform. So where is the value in having a stock broker?
  • Latest, greatest Macquarie Bank research (e.g. Daily Bulletin)
  • Offers to other financial products, and other types of investments
  • Comment from the stock broker in terms of market direction, good companies to invest in, investment strategies (e.g. dividend stripping)
  • Communication / partnership with the stock broker in terms of obtaining financial short-term, medium-term goals
  • Exclusive rights to Macquarie Bank led IPOs (indeed I just been offered a parcel of wotif.com, something for this weekend's blog)
  • Access to Macquarie Bank customer events (ok, not too many have been held, but the last one was hugely fun at NGV)
  • And lastly, having fun shouting 'buy, buy' on the phone while you are at work ;)
So I would definately advocate having a stock broker if you are going to invest in the stock market - it definately enriches the experience of investing.

4 comments:

Jem said...

Nice one MJ.

Do you think you are pressured by the broker to transact more frequently than necessary?

Jem

MJ said...

Jem, you know the actual blog was prompted by my stock broker trying to get me to buy / sell yesterday! I think you are somewhat right - there is some pressure to buy / sell. It is, however, not that simple. Correct buy / sell calls can only be made in hindsight and I disbelieve in the policy 'buy and forget' - so some vigilance is required. So I guess I am saying that initially it could be a trap for inexperienced individuals but as long as you aware of the motivations of your stock broker you know that you have the final say on all buy / sell decisions and you act accordingly.

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