“The stock market is a device of transferring money from impatient to the patient.” –Warren Buffett
Investing online or trading online, is a way by which individual investors and traders buy and sell securities over an electronic network, typically with a brokerage firm.
“Online investing can be a rewarding way to set and reach financial goals.”
Myths Vs. The reality of Investing Online– Online investing isn’t a guaranteed way to get rich. In fact, research shows that the vast majority of day traders – the handful of online stock traders who are the busiest – lose money. Though online investing isn’t for everybody. It can be a powerful tool for investors who are disciplined about research, make carefully reasoned decisions and maintain a balanced portfolio.
Basic of Investing online– before you decide to manage your own investment portfolio online you should know that what kind of investor you are? Being an investor you carry the responsibility for researching all investments and making all of the investment decisions in your online account.
Start small– don’t put your entire life savings into an online account. Start with a smaller sum. This will be easier to handle and keep track of. Once you feel confident you can then decide to add more money to your online account.
Stay diversified– large-cap domestic stocks can make up part of your portfolio but you should take into account your time horizon and risk tolerance to develop a well-balanced portfolio of stocks, bonds, and cash.
Costs may not always be obvious- even if online brokerage costs are lower than those of full-service brokers, they can still add up, particularly if you do a lot of buying and selling. Before you start buying and selling stocks or mutual funds online on a large scale, you should give careful thought to what the tax bite would be as a result of such trading.
Information is power- If you are going to buy and sell individual stocks online. It is your duty to keep as well informed as possible about what is going on with the company in question. Don’t just settle for the hype about hot stocks.
Problems are inevitable- Trading online is not foolproof. There will be times when you can’t access your account. You could be away from your computer when the market makes a major move, Internet connection down, online brokerage firm’s server crash and unexpected software glitches.