Here’s What You Need to Know About Online Investing

Online investing tools have made it faster, easier, and cheaper to buy investing products, and have opened up the world of investing to a whole new group of people.

These tools are popular — 73 percent of investors around the world use them. But if you’ve never used online investing tools before, you shouldn’t just rush to your computer and open a brokerage account without understanding the basics of how online investing works.

There are different types of online investing accounts, like IRAs or custodial accounts for children. You’ll need to know what you’re investing for, and you’ll need to know what kinds of investment products you’re interested in purchasing. When you invest online, you’ll be the one in charge — you’ll be the one making all the decisions about what to buy and sell and when to buy and sell it. If you think you can handle the responsibility, you’ll need to know where to find a reputable online brokerage, how to find stock information, how to place orders, and what to do if you have a complaint.

Find a Good Online Brokerage

Online brokerages are just like any other type of business — some are trustworthy and dependable, while others are less so. Naturally, you want to choose a brokerage of the reputable stripe. But where do you look for such a brokerage, especially if you’ve never invested online before?

Luckily, the Financial Industry Regulatory Authority (FINRA) offers a free tool called BrokerCheck that can tell you if the brokerage you’re considering is legit. BrokerCheck can give you information about brokerages and investment advisor firms, and can also help you find online background reports and other resources for investors. If you don’t even know where to find brokers to run through BrokerCheck, try asking friends who have invested online, or simply search “online brokerages.”
Once you find a brokerage, open an account and put in some money. You don’t need much, and many brokerages allow you to open an account with no minimum deposit. Keep putting money in your brokerage account regularly so you can continue to grow your wealth.

Find Stock Information and Choose Investments

Once you’ve found a brokerage and opened an account, it’s time to start looking at stocks. You don’t have to start buying and selling right away; in fact, if you’re new to investing, you should practice first. Go to the Investor Simulator Center to practice conducting online trades. Use paperTrade to improve your investing strategies. If you run into terms you don’t understand — and you probably will — look them up on Investopedia.
To find stock information about companies that interest you, look up their stock symbols on Google or another search engine, or use the Wolfram Alpha search engine, which is specific to stock information.

Placing Stock Orders in an Online Brokerage Account

If you’ve never placed stock orders in an online brokerage account before, there are a few things you need to know. For example, your orders may not always go through right away; things like faulty equipment or heavy Internet traffic can delay your orders. There’s no law that says an order has to be executed within a certain time frame. Other important things to know include:

• You should make sure an order is cancelled before you place another order. If your order was already placed, it might have gone through anyway.
• You should always verify that your order didn’t go through before trying to place it again. Many people accidentally buy more stock than they wanted or more than they can afford.
• When you trade on margin, the brokerage can sell the stock without telling you. They’ll usually do this if the market tanks.
• If you’re trading in a cash account, you have to pay for any stocks you buy before you can sell them again. Your brokerage could freeze your account if you try to buy stock you can’t afford and then sell it again in order to pay for it, a practice called “freeriding.”

The Securities and Exchange Commission (SEC) maintains a number of helpful investing tips on its website.

Know How to Make a Complaint

If you feel you have to file a complaint against your brokerage, do it as soon as possible, since you only have a limited amount of time to file such complaints. Call and ask for an explanation of the problem. If you don’t get one, or you’re not satisfied with the one you do get, write to the firm’s compliance office explaining the problem and what you want done about it. Request a written response within 30 days. If that doesn’t work, contact the SEC and forward copies of your complaint and any correspondence you may have exchanged with the firm.

Online investing is an easy and fast way to expand your portfolio and increase your wealth. With a little practice using online tools, you can soon learn to research your own investments and conduct your own trades. Then you can join the growing majority of folks who are taking control of their own financial freedom.

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