Is Buying Stocks
and Investing Online better than a Broker
January 26th,
2006
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Have you ever
thought about buying your own stocks? Buying stocks online can be less
expensive, however a traditional stock broker
can advise you on what stocks to purchase. With the traditional
broker you could have both
services, as the stock broker may have already done a lot of research
for you.
If you have never
purchased stock before you should consider a mutual fund to be your
first stock investment. A mutual fund is a collection of stocks and
bonds. There are many combinations of mutual funds, and they are
not fool-proof, and you can still lose money. However, you have a better
chance at making money with mutual funds because of diversity. With
diversity you have a better chance at making growth on your investment.
To invest in just one stock is risky business.
In weighing which
are the best mutual funds you can see past performance records to give
you and idea how much money you could make. You can select lower risk
mutual funds that do not necessarily get you rich, but have a lesser
chance of losing money. The more “aggressive” mutual funds are riskier
but can make more money faster, but also can lose more money faster too.
I think the online
trading sites such as etrade.com, schwab.com and fidelity.com are just
as good as a traditional broker at offering mutual funds and well as
stock trading capability. If you like the idea of a person to talk with
about the investments, you will pay more for the service. The personal
service can be a great help in getting a solid investment portfolio.
Trading stocks
online can range from as low as $4 per stock trade up to $19 per trade. The
cheapest price may not be the best, because if you want to make fast
trades, you might find that the least expensive trade is too slow to
accomplish the job. You may consider setting up an account at each one
just to try them out. You usually set up a $500 or more balance in a
money market type of bank account with them. Once you have the account
set up then you can start buying and selling. Make sure to read the
fine print as there can be service fees associated with an inactive
money market savings account. So if you plan on buying online, plan on
putting funds in the money market savings account on a regular basis.
If your goal is to
trade lots of stocks, online trading is a good idea. Don’t forget to
take careful accounting of purchase price, date of purchase, and the
number of shares. On the day you sell the stock you need to make note
of the date of sale and the amount, and how much profit or loss. You
will need to record of all the buy and sells and amounts made or lost
for tax purposes. Trading stocks can be a risky deal because you have
to pay taxes on all the profits on the traded stock. You might consider
keeping a running tally of estimated taxes you will need to pay for the
year.
If you get to
where you are not investing online any longer you can request to close
out your account and receive paper certificates for your stocks. This
can save you a bunch of money in service fees from the inactive money
market account. When you are ready to sell your stock you can follow
the instructions on the stock certificate.
If you plan on
purchasing stocks or mutual funds very rarely or less than once a year,
you probably would be better off working with a stock broker or a bank
to invest. The cost of the inactivity of the online money market
account would likely add up to more than the cost of the one time
purchase. Don’t forget that most banks offer investing services. So
check in with your local bank to see what they have to offer. Always
read the fine print when investing and ask what the fees are whether you
decide to invest online or with a broker.
By
Nicole Wilson
Best Syndication Staff Writer
Keywords and misspellings: stok maket inveting
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