Online investing is a convenient and cost effective way to manage your investments-it allows you to be in complete control of your money and to buy and sell investments with a click of your mouse.
But to reap the benefits of online investing provides, be sure to select a service that provides the tools you need to successfully manage your investments.
Features and Benefits
Specific features to look for include:
- An accessible web site with easy navigation.
- A well-organized trading screen with built-in safety guards to prevent data entry errors.
- Access to real time quotes-current stock prices displayed on the screen.
- A quick confirmation system.
- Current portfolio updates and account balances.
- Easy access to customer service-preferably 24-hours a day, 7 days a week.
- A low minimum dollar amount to open an account.
- The ability to conduct buy or sell stops, which instructs the system to buy or sell a specific security automatically when it hits a predetermined price.
- A full range of investment vehicles including stocks, bonds and mutual funds.
- Automatic sweep of un-invested cash into a money market fund.
To make your online investment experience more profitable, follow these best practices:
- Do your homework.
Research is the key to trading success. Always do research before buying any investment. Most online brokerages offer research and financial news in addition to stock and mutual fund quotes.
- Research "hot tips."
You'll discover many active investment message boards. These boards are full of unfounded rumors. Research all "hot tips" you might encounter or avoid message boards entirely.
- Type accurately.
Check and double-check the order you type in. Is that the right ticker symbol? Do you have the right number of shares? If rushed or distracted, you could make a serious mistake.
- Understand market and limit orders.
Market orders are filled at the price a stock is trading at the time the order is received. If the stock price is volatile that day, you might pay more than you planned to. With limit orders, you set the buy or sell price, but you run the risk of not getting your order executed. Review your broker's trading guide before getting started to be sure you pick the order type that's right for you.
- Buy and hold.
Studies show that a buy and hold strategy is much more effective than trying to time the market with active trading.