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Online Stock Investing

Updated on September 17, 2008

Have you ever thought about investing your money on the stock market?

I bet you have. However, your next thought probably had something to do with how you don’t have thousands of dollars to invest, so it’s not worth it to even bother.

Investing in the stock market several years ago was a bit out of range for small investors who wanted to devote only a few hundred dollars. In order to make a trade, you had to hire a broker who would follow the stock price and either sell or buy the stock per your request. Brokerage firms would collect hefty commission fees, which made investing unprofitable for really small investors. As well, the traditional broker may have required you to maintain a minimum account balance, creating another obstacle for small investors.

Nowadays, the power of online technology has changed how we do business in many ways. The internet has enabled new ideas and new business practices. Today, buying or selling goods online is practically free. The transaction costs associated with the sale of a product is reduced to the minimum.

Can you use online tools to make investing on the stock market more affordable for small investors?

If you can buy books, electronics, and music over the internet, why can’t you trade stock? The answer is that you can, and many people do, invest using online tools. Using the internet to investing on the stock market is made available to investors through the use of online brokers. Online brokerage firms operate in the same way as traditional brokers, but since they are online, they don’t charge as much. By using an internet trader, you can monitor stock prices and decide whether to buy or sell depending on what you want to achieve.

You can buy or sell stock with a few clicks of a mouse.

In order to start investing online, you need to create an account with a brokerage firm. Some firms require a minimum balance, but it’s usually only a couple of hundred dollars. After you set up your account and add funds to it, you can start trading.

There are many online brokers available. In my opinion, the most popular ones are:

- sharebuilder.com

- etrade.com

- scottrade.com

- tdameritrade.com

- schwab.com

All of these sites offer similar services; however, they differ when it comes to the minimum balance required and fees collected. Some may offer special software to make your investing easier and to help monitor stock prices. I suggest you visit these websites and check them out to see what fits your needs.

It is important to remember that, unlike putting money in a CD account, short-term investments on the stock market may incur a loss. So if you only invest for a short period of time, you may lose money. Investing in the stock market is one of the riskier kinds of investments. However, the return on your investment is usually higher than if you put the money in a bank account. For many people the higher return may the decisive factor to invest in stock. One way to avoid a disappointment while investing in stocks is to simply be prepared to lose your money—don’t invest more than you can afford to risk. On the other hand, if you know what you are doing, you could make a great profit. I suggest you learn how to trade before you actually start doing it on your own. Good luck out there!

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