The first decision you must make after you have decided to invest in the stock market is what type of stockbroker you want. If you want to buy shares you must purchase them through a licenced broker, there's really no way around it.
Most brokerage houses provide three basic types of account: full advisory, discretionary, and execution only. The titles of the accounts refer to the type of service the stockbroker will provide. For a full advisory account, for instance, the broker must devise a comprehensive investing strategy that meets all of the client's financial needs. On the other end of the spectrum, the execution-only account means that the broker has no say in investments or trades, he simply executes an order.
As you might expect, the most popular account is the one in the middle. The discretionary account gives the broker the right to buy and sell some shares without the express approval of his client. However, the broker is not responsible for devising a financial strategy that takes individual needs into consideration.
Which do we recommend? It really does depend on where you are in life and your experience with investing. Most young couples begin with the discretionary account and then upgrade to a full advisory account when they start having kids. The broker provides vital services that will help them save for college and for retirement.
The only account that we cannot in good faith recommend is the execution-only account. Yes, we know… everyone thinks they can do better than their broker. But the fact is there's a reason why they trade stocks for a living. Most of them are very good at it. Not to mention the fact that when people trade their own money they tend to over-analyse and second-guess themselves; which leads to many sleepless nights. In short, it's best to leave the trading to the pros.