Online Investing – Is it a Good Idea?

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There are still a fair amount of people that use a full service brokerage. But is it necessary? And if not, should you use switch to online stock investing? Is it a good idea?

Consider that online investing has existed for approximately 15 years. So if something were to happen regarding online stock investing it would have happened by now. That does not mean you should just sign up with any company that exists. You have to do some research.

To start, stick with the well know firms such as TradeKing, Etrade, and Schwab. Do a financial check on them using Yahoo or Morningstar. Make sure whichever company you decide to go with that they are in good financial standing. Also, contact their customer support to see how quickly they get back to you. You can ask some questions regarding the service, etc.

So now that you know that online trading is safe and you generally know how to pick an online broker, what are you waiting for? Online trading is not only fun to do, it has the advantage of being typically a lot cheaper. As for stock advice, how good has your full service broker been with that? Did he / she get you out of the market before the current economic crisis happened or did they advise you to keep buying and selling stocks and hence generating a commission for them?

The online brokers are all very competitive so you can expect a lot of features that can help you with your investing. They often offer research, historical quotes, and live price quotes. If you like to trade options there are usually a whole slew of tools dedicated to that purpose as well. Often the online broker will let you set up a link between your bank account and the brokerage to allow easy transfer to or from accounts. This makes funding much easier.

As for executions of trades, I can tell you that has gotten much better over the years. This is from personal experience. But you can control that too by looking at the bid / ask prices and specifying exactly when price point you want. For long term trading horizons this is less necessary but it is there for people who feel it's important.

Online stock investing is easy to set up, easy to use and has the added advantage of being cheaper than working with a full service broker. The advantage of instant access to funding and trading also gives you the benefit of knowing that your transactions will be executed in a timely manner. The point is, online brokers are so competitive that they will constantly work to provide you with more options and better service. If you are still a little wary about taking the plunge, you can start out small and make little trades for smaller amounts of money. Then you can increase your purchases the more comfortable you feel with the online broker and its service. In the end everyone wins with online stock investing.

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Source by James Cochrane