There's no reason why you can not trust a stock broker especially if they are working for a major firm. There's a lot of stories that go around about how they can't be trust or how dumb they are but these stories can not be substantiated. However, with o9nly $500 neither as stock broker nor any other professional can help you build a diversified portfolio using common stocks.
With only $500 and wanting a diverse portfolio you should be looking into mutual funds or ETFs and not individual stocks
Using these investment vehicle you can build a diversified potfolio and the expense of buying (and or selling) would be very reasonable.
Using a broker will add to your costs, you can do this yourself. $500 is not much in terms of buying many stocks, even at $7 per trade the transaction costs will eat you alive. A diverse portfolio can be achieved with as little as 4 stocks, although many consider 10 as a minimum. I would not try and buy 10 stocks with $500. Since you are looking to create a new diverse portfolio I would suggest that you buy 1 stock every time you get $500 to invest. Do this until you have 5-10 stocks and then begin adding additional shares to your portfolio after you have achieved this.
Don't do stock brokers, they just want you to trade so they can get the commission. Just use an online broker like scottrade or ameritrade. Also, it is not good to have many different stocks. Better to have a few solid ones. If you thinking about buying penny stocks, be warned that it is very easy to lose your money. You might think all it has to do is go up 1 penny and you double your money, but in reality, your trade can be stuck and the stock and reverse split and you lose everything.
It isn't worth it and you obviously can't have a well-diversified stock portfolio for $500.
If you use a Broker, the commission is likely to be closer to $50...
Wait till you have $10k saved up then get a good mutual fund like Wellington.
that's about the best rate going. fidelity is about 7.95.
keep in mind it is per trade, one share or a thousand shares.
TradeMonster is only $5.00 a trade . and have VERY good service and a great App .
Hello,
I'm a new investor looking to open a diverse portfolio. What the best way to go about this is. Some tell me to use a personal broker, others say don't trust them and just use the internet.
I've been looking into ETrade and Scottrade but find that it's at least $7 anywhere to buy a stock. If I have about $500 to spend and want many different stocks in my portfolio, how is it worth it?
Would getting a stock broker save me some money in this department?
Thank you.
