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Lesson 8. Brokers and Brokerage Houses > Educate Yourself - Pg. 45

Brokers and Brokerage Houses 45 Because e-brokerages are virtual firms, they have little or no overhead. They have no need for expensive items such as prestigious office buildings. Since they send their quarterly statements via e-mail, they save money on paper and printing costs. With orders being sent in electronically, staff costs are minimal. As a result, the cost for a basic purchase or sale of stock can be as low as $7. That's almost a tenth of the $75 cost of the full service broker price mentioned earlier. Warning bells are going off in your head. "There must be a catch," you say. Depending on what kind of investor you want to become, there might be. However, most of the loopholes have already been addressed directly. For example, investors who want information on stocks, trends, market happenings, etc., will find it supplied in the electronic library of the e-brokerage. Unlike full service and discount brokerages, they provide it free of cost. Daily stock and market updates are also available online, as are advice and answers to specific questions from investors. Again, all of these services are available online, and they're free. The investor is, of course, charged with the responsibility of doing the footwork, researching the stock and reading up on market trends--something many, many investors simply don't like doing. Should you have a problem or dislike typing in the order and want to speak to a live person, that service is also available. However, be aware that there is usually an extra charge for that service, and you run the risk of looking very 1980s. E-brokerages have come along last in the line of brokerage services. Thus they have had ample opportunity to see what the average investor wanted in a brokerage and adapted brilliantly to fill those needs. The biggest disadvantage of the e-broker is also its greatest appeal. The investor is directly responsible for the decisions concerning his or her own money and investments. Educate Yourself