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In order to invest in financial markets, an effective choice has been to secure the services of the best discount brokers in India. The choice of a discount broker involves some benefits but some problems as well. Let us explore the various benefits along with risks that are posed by a discount broker.
Benefits
The major benefit that you are going to achieve when you avail the services of such a broker is the commissions are expected to be cheaper. The moment you are into regular purchase of stocks or even securities, you do not want to be paying for more than what you intend to do. As far as a traditional broker is concerned, it is on expected lines that you might have to be dealing with a large commission structure. This fee is based on the total cost of the transaction size. A large commission can eat into the amount of profits that you earn in the market.
If you are not an individual who is looking to invest a regular sum of money at periodic intervals of time, a tendency would be to achieve this in a cheap way as far as possible. A substantial amount of money would be given out in the form of commissions.
The main benefit when you avail the services of a discount broker is safety. If a broker levies a lower rate of commission it means they are making up for transactions in bulk. The better quality discount brokers are expected to be large ones. This would mean that your investment would be smaller than whether you are going to opt for a small brokerage firm that is unknown.
Risks
Though you could be saving some amount of money with a discount broker, there are some loopholes you need to guard as well. When it is the case with discount brokers they are going to lave all the investment decisions on to you. They do not pay a lot of attention on what you are buying or selling till the point you go on to buy or sell. In the event of you need some help you would not be able to get any advice as is the case with a full time broker. They are merely going to provide you with an online platform and some generic information that is on the website for everyone to read and interpret. In case if you are really looking for help they might not even be available as they are really busy.
In case of a discount broker you are at a risk of sacrificing some features or benefits that you normally can expect with a full time service broker. It is in fact not even possible to invest in a host of securities when you avail services of a discount broker. Most of them are going to focus on the popular investment types. This is going to restrict your options and have an impact on your returns in the long run.
