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Is Buying Stocks and Investing Online better than a Broker

January 26th, 2006

Is Buying Stocks and Investing Online better than a Broker

Stock Ticker

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.

 
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By Nicole Wilson
Best Syndication Staff Writer

 

Keywords and misspellings:  stok maket inveting how-to buy and sell on-line boker fees feeze costs

 


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Copyright 2005 Best Syndication                                     Last Updated Saturday, July 10, 2010 09:49 PM