The availability of online brokerages has made mutual fund investing accessible to the masses. The first thing you need to do is find a great online brokerage, but there is a lot to consider while you’re searching for the right one. Here are the most important things to look for in a mutual fund brokerage.
- Stellar Customer Service
In this day and age, there should be a multitude of ways to contact a customer service representative. A customer service phone line is a must-have for any brokerage, but some are limited by typical 9 to 5 hours of business. For starters, look for a 24/7 customer service line. Most online mutual fund brokerages will offer web chat, allowing you to speak with a live customer service rep through a secured connection; in this day and age, email support should be a given.
- Solid Reference Materials
Nobody learns how to invest overnight. If you’re a beginner, you’re going to have a lot of questions; not all online brokerages will have
high-qualityreference and educational materials. You’ll find that some will even have free investing simulators that let you practice with fake currency. As you search for the best mutual fund brokerage, ask yourself if you’re willing to pay a little extra for these tools. Do you want to spend the extra few dollars per transaction Some brokerages may boast cheap trading fees, but the bargain comes at a price—they are more oriented towards experienced traders who don’t need a crash course in mutual fund investments.
- Costs, Fees, and Everything in Between
When you’re investing online, you’re going to pay some fees. First off, you’ll need a minimum investment of before you even open an account with most brokerages. The minimum depends on the brokerage; be prepared to have anywhere between $500 and $3,000 before you start. You might even need to start with $5,000!
Then there are all the fees and costs associated with investing in the fund itself: you’ll have to pay management fees and help shoulder the costs of distribution. Then there are the transaction costs including brokerage commissions, market costs, and spread costs. Depending on the fund, you’ll pay higher in expense fees. Index funds may cost as little as 0.02% in expense ratios, whereas the average sits at around 1.5%. You might pay as much as 2%. Did you invest in an international mutual fund? Prepare to pay even more.
Finding the right mutual fund brokerage will take time and research. Don’t jump onto the first deal you see; make sure the brokerage can meet all your needs. Great customer service, low fees and a library of beginner’s resources can make all the difference.