Investing in a bank or brokerage firm: Which is better?

Investing in a bank or brokerage firm: Which is better?

In times of financial crisis, such as that Brazil has experienced in recent years, many Brazilians start looking for ways to create a stocking foot or to get an emergency fund, starting at the investments that are available from banks and brokerage firms. Because of this, many investors do not know which institutions have the best forms of applications.

Both financial companies allow their clients the investment options that each one has, in addition to being able to consult the specifications of each product before investing. This means that, even though they are two different types of business, the two institutions work in the same area of ​​the investment market, with few differences between them.

What is the difference between these two financial companies?

What is the difference between these two financial companies?

The main difference between the two means of investing is in relation to its area of ​​activity. While banks work directly with all sorts of financial functions, such as personal credit programs, checking accounts and investments, brokerage firms operate solely on the sale of products to investors, something that can be taken into account at the time of choice.

However, even when operating in various areas of the financial sector, banks present to their customers who wish to invest more convenience at the time of application, and do not need to open another account to make the move. But even so, brokerages still take advantages in some ways compared to the most famous financial institutions.

  • When we see the values ​​charged on the fees on each product, the brokerage firms have a slight advantage, not charging their customers a value by opening the account or for some specific types of investments, as in the case of Treasury Direct applications. Even with several products, brokers and banks have a big difference in the products offered.
  • In most cases, banks only offer their clients the products offered by their company, which is not the case with brokerage firms, which operate with investments from all major financial institutions. That small difference may weigh heavily when choosing the best place to apply the savings and start investing.

However, what virtually every investor wants to know is about the profitability of their product, where the brokerage firm is taking advantage of having greater investment options with a wide range of profitability options. However, it is very important to remember that even with almost no differences, it is in the small details that the investor is successful.

An important point in favor of the brokerage firms is in relation to the products offered to the clients, since some banks usually sell capitalization bonds and other inappropriate options as a form of investment. Being that in reality, these products do not fit.

The other aspects that are taken into account, such as the attendance, investment monitoring and security, where both companies have the same attributes, and do not have differences that can be considered relevant for the decision.

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How to choose between bank or brokerage?

Choosing between a bank financial institution where the client is already a broker or a company specializing in investments is a task that depends on each type of investor. For applicators who have large sums of money, investing through a broker or a bank will not have as many differences, only in some options of the products offered.

However in both media the large client will have access to lower rates, besides the differentiated service. This may become a pro-brokerage point, especially for investors who have little investment capital and want to have several product options to apply without charging too many fees.

However, banks are more viable options for investors who wish to have greater convenience, since there is no need for the client to open a new account with the new financial institution. However, it is worth remembering that most brokerages do not usually charge the account opening fee to new clients and, in some cases, deduct Treasury Direct fees.

  • Even with few differences and with a slight advantage for the brokerage firms, choosing between investing through one of these two companies is an issue that does not have the right answer, depending solely and exclusively on the client. Choosing between banks and brokerages is according to the profile of each one, mainly because there are not big differences between both methods.