Points to ponder when picking a brokerage

If you’ve been learning about investing and are ready to plunk some money into a few stocks, you probably need to pick a brokerage. (Even if you already have one, you might look around for a better one.) Opening a brokerage account is not much more complicated than opening a bank account, but here are some factors you might consider as you compare brokerages.

• Costs. Traditional full-service brokerages can charge $100 or more per trade, but there are plenty of terrific brokerages charging $12 or less. Consider what other fees are charged, too (IRA custodian fees, wire transfer fees, account inactivity fees, annual fees, etc.).

• Minimum initial deposit. Some brokerages require at least several thousand dollars, while others have no minimum.

• Usability and service. If the brokerage offers online trading, check out its Web site’s interface and see how easy it is to use. Ask some questions and see how responsive the customer service is.

• Banking services. Some brokerages now offer banking services, such as check-writing, money market accounts, credit cards, ATM cards, direct deposit and more.

• Research. Many brokerages now offer free company research for their customers. Of course, there’s plenty of research available for free all over the Web.

• Mutual fund offerings. Many brokerages offer a variety of mutual funds. If you’re interested in some particular funds, check to see which brokerages offer them. Know, though, that you can usually purchase no-load mutual funds directly from their companies.

• Non-stock offerings. If you’re interested in bonds, for example, see whether they’re offered.

• Convenience. Would you rather place orders through an actual person, touch-tone phone or the Web?

Some of these factors are more important than others. For example, if you trade only twice a year, commission costs might not matter too much. To guide your decision, list all the services you need and use — then evaluate each contender on each category. For more on brokerages, visit www.brokerage.fool.com and http://dmoz.org/Business/ Investing/Brokerages.

Next week we’ll tackle kinds of orders.

Ask the Fool

Q: Is remodeling my home worth it? — H.K., San Antonio

A: It depends on the job. With the vast majority of remodeling projects, you won’t get all of your money back when you sell your home. But with some upgrades, you’ll get much of it back. Plus, while you live in the home, you’ll get to enjoy white bathroom tiles instead of pink and black ones.

The folks writing online at RemodelingMagazine.com compare construction costs with resale value in 60 markets nationwide each year. Here are some national average costs and cost recovery percentages for a few typical jobs. Upscale siding replacement: $10,393, 104 percent. Midrange bathroom remodeling: $10,500, 102 percent. Major midrange kitchen remodeling: $43,862, 91 percent. Major upscale kitchen remodeling: $81,552, 85 percent. Midrange window replacements: $9,684, 90 percent.

Q: Is it enough to read through a company’s financial statements, or should I read the footnotes, too? — T.N., Springfield, Ill.

A: You can miss some red flags (or green ones) by skipping the footnotes. At footnoted.org, Michelle Leder offers a fascinating education on footnotes. For example, she noted that Dov Pharmaceutical’s board of directors bestowed on Dr. Leslie Hudson, its CEO, who was departing after serving just one year and seeing the company’s stock drop 80 percent, “two years of salary plus the ability to keep the 100,000 shares of restricted stock.” This is good stuff to know about companies that may interest you.

My dumbest investment

It was the late ‘80s, I was 12, and I was fascinated by Wal-Mart and how it made its money. At that age, my parents trusted me with a portion of my college savings. We must have flown on Southwest at least 10 times in three years. I thought the attendants were hysterical! It seemed to have similar values as Wal-Mart, and I really thought the airline would soon expand. I didn’t buy shares of Southwest. Instead I was swayed by my parents’ broker to buy into Toys-R-Us. Well, Toys fell on hard times, but Southwest prospered.Cannon Fletcher, Little Rock, Ark.

The Fool Responds: Many people are swayed by brokers, assuming they’re much savvier stock pickers. But remember that many brokers are simply salespeople.