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4 things for do-it-yourself investors to look out for in 2013

If you are a self-directed investor prepare for even more marketing, incentives and competition for your business in 2013.  With modest trading volumes and account openings in 2012, a gun-shy investor base and increased downward pressure on commission pricing, discount brokerages will be trying very hard to win new business in 2013 but also to keep their existing clients from jumping ship.  So what should do-it-yourself investors keep an eye out for in 2013?

#1 Lots of deals and even more fine print

Investors - Lots of deals and more fine print

Bigger deals for self-directed investors mean lots of fine print to pay attention to. Although they may seem like deals, make sure to ask “What’s the catch?”

Look over and understand the strings attached to offers that require longer-term commitments of your capital. Large numbers of “free trades” are being offered but if you don’t really use them to their fullest, it may not be the best deal for you.  Also, pay close attention to “cash back” offers because those usually have restrictions on minimum balances or moving your money around within certain time frames.

#2 The marketing of “value” instead of “price”

Investors - Marketing of value instead of price

2013 will be an interesting year for pricing.  The ‘race to the bottom’ in pricing will come up against those players who will try to offer more “value” for the money.  The result: brokerages will try to offer “new” services.  Unfortunately, in finance “new” is a double-edged sword.

Sure it may seem like a reasonable premise to try something new especially if something old isn’t working, however unless some new product can be demonstrated to work, why risk one’s money as the guinea pig? So-called “new” services are likely to be repackaged older services so be ready to ask how the “new” service is so different than similar “older” services.

Also, adding bells and whistles that you don’t need or use becomes a frivolous reason to pay more than you otherwise would to forego the frills.  Requesting trials of accounts or services before you commit to opening an account is a great way to test drive whether or not a discount brokerage’s services are worth the price they charge.

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