Online Brokerage analysis
You will evaluate the choices in purchasing stock via online brokerage accounts (where you can buy and sell stock via the Internet) and the use of dividend reinvestment plans (known as DIPs and DRIPs) or mutual funds or index funds. For online brokers, you will be looking for the requirements to open the accounts: costs, minimum balances, and other features. Because most DIPs or DRIPs are available from publicly traded companies, you can search their Web sites or a search engine on these plans and their requirements. Tasks: Summarize the course project to this point. Analyze three online trading sites, and determine the requirements for trading, including the price per trade. Compare and contrast the online trading companies. Evaluate three companies (look for investor information) that offer DIPs or DRIPs. Summarize requirements, including minimum investments, nature of the return, costs, and other features
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Online Brokerage analysis
The online brokerage provides various choices in the stock exchange where buyers and sellers exchange stock through the broker’s websites and applications. Investors can trade stocks, bonds, and mutual funds using the websites. Some brokers use the dividend reinvestment plans where they allow stock owners to reinvest the dividends received from their stocks rather than getting the dividends in cash. However, several eligibility requirements that an investor needs to meet for trading vary for different traders and sites.
E*TRADE is one of the best trading sites that provides a wide range of investment choices, from simple brokerage accounts for newbies to advanced options for proficient traders. The site has more than 10,000 mutual funds for investment and over 5,000 that are no-load and do not require transaction fees (Nguyen, 2018). E*TRADERS also provides saving and checking accounts, allowing investors to transfer funds between the accounts without any fee. Investors are given learning facilities such as webinars, articles, and snapshots, including market reports and news; hence they can grow.
E*TRADERS does not require new investors to make a minimum investment; however, customers are advised to have a minimum of $ 500 in their accounts to apprehend real growth, which is a warm threshold (Nguyen, 2018). New traders must also fill in various details, including a social security number or a taxpayer number, valid email and postal addresses, employment information, and information about their household income. The site also requires a minimum price of $ 4.95 per trade, no charges for low-priced stocks, and no dormancy charges. Customers are charged $ 25 for broker-backed trades and some commission and fees depending on the type of trade (Nguyen, 2018).
TD Ameritrade is another online stock trading site that offers investment choices absent in other platforms such as E*TRADE, including forex trading in more than 20 currencies. The platform also permits investors to buy IPO stocks which are the stocks of companies that lately shifted from private stocks to the public. In TD Ameritrade, shares are typically limited to institutional investors. Nonetheless, investors can acquire shares through the account only if the TD is part of the group selling IPO.
Investors using TD Ameritrade can acquire trading information, including research, planning, and educational tools through the platform, including the daily market commentary. The platform also has a “think or swim” platform that allows skilled investors to course trading imitations before placing money into a trade. Users can also generate progressive earnings and charting and analysis, create watch lists, and receive signals that trail the price movements, size, and stock positions list. This is one of the unique features that distinguish TD American from other platforms (Nguyen, 2018).
TD American requires $ 0 for online trading stocks, ETFs, and mutual funds, while users must have $ 5.00 for an interactive voice response system (Nguyen, 2018). For a broker-assisted system, investors pay a commission of $ 25.00 for trading stocks and ETFs. On the other hand, users pay up to $ 49.00 for buys and $ 0 for no-load sales, while no commission is pain on load (Nguyen, 2018). TD American also offers local and online assistance phone, social media, online chat, email, and at local branches.
Fidelity remains the best platform globally, offering diverse mutual funds with zero expense ratios. The platform does not require any fees or minimum deposits for starting a trading brokerage account. Furthermore, Fidelity provides many different investment options, where a single investment trader can choose from managing the portfolio themselves or using the Fidelity Go robot provided by the company. Large investors can select from three dissimilar wealth management plans with the help of investment management advisors.
Dividend Reinvestment Plans (DRIPs) allow investors to appreciate compounding interest habitually at a lower cost. Under the DRIPs program, received dividends are used to buy more stock of the distributing company on an average cost basis. Investors enrolled in DRIP never receive the payouts in cash. Some companies issuing DRIP include Realty Income Corporation, Procter & Gamble Company, and AFLAC Incorporated.
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Realty Income Corporation requires a minimum investment of $1,500 (or $100 per month when enrolling in constant monthly purchases) for investors to start new accounts (Nguyen, 2018). The company is designed as a REIT, where the cash reinforces its monthly dividends flows from more than 11,000 real estate assets possessed under lasting net lease contracts with commercial customers. Realty Income Corporation has compound solid annual returns of 15.3 %and compound annual dividend growth of 4.4 % (Nguyen, 2018).
Investors who are residents of the United States or those residing outside are allowed to join AFLAC Incorporated, provided they are not subject to any governmental prohibitions. Investors who do not possess stock and are not associates must make an initial investment of at least $ 1,000 besides completing an enrolment form. On the other hand, associates must pay a minimum investment of $ 50 which is deducted automatically from the accounting statements (Ang et al., 2019).
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The Procter & Gamble Company offers direct investment and dividend reinvestment plans, which require an initial minimum investment of $250. The Procter & Gamble Company investments have a variable return rate which is given in the form of dividends and capital gains. Therefore, buying stocks through Procter & Gamble Company is a suitable choice for long-term investment decisions.
References
Ang, T. C. C., Chang, X., Hu, X., & Verwijmeren, P. (2019). Equity Financing, Equity Lending, and Price Pressure: The Case of DRIP Arbitrage. Nanyang Business School Research Paper, (20-03).https://dx.doi.org/10.2139/ssrn.3552416
Nguyen, N. (2018). Hidden Markov model for stock trading. International Journal of Financial Studies, 6(2), 36. https://doi.org/10.3390/ijfs6020036