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How do I Invest Online?

Article Details
  • Written By: Geri Terzo
  • Edited By: C. Wilborn
  • Last Modified Date: 14 October 2018
  • Copyright Protected:
    2003-2018
    Conjecture Corporation
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Online investing has become the most common form of trading for individuals thanks to the proliferation of the Internet. Although traditional brick-and-mortar stock brokers still exist, most firms have expanded to include online capabilities or created an exclusive Internet offering. In the absence of a physical broker or to supplement the online trading experience, most online trading firms provide Internet trading tools for investors. To invest online, you will have to satisfy some requirements, but overall will be able to execute trades quickly and at will.

Before beginning to investing online, you must open a broker account on the Internet. Typically, users must be at least 18 years of age and invest a minimum amount in order to begin trading, although some brokers waive a minimum investment if an investor also opens up a checking or savings account at the firm. Certain online brokers charge flat trading commissions to accommodate a certain number of trades in addition to some ancillary fees. Depending on the frequency in which you expect to trade, fees will vary.

To optimize the online investment experience, there are trading tools on a broker's website. Some of these tools include stock charts, live quotes, and news updates, all of which can help you to invest online. While most of these tools can be accessed free of charge, some trading firms sell advanced investing software on their websites to help clients invest online.

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The two major types of online brokers are full-service and discount trading firms, and the one selected will determine the level of support provided and also trading costs that are required to invest online. As the name suggests, a discount broker charges commissions and fees that are cheaper than a full service broker. Fees become highly competitive among the online brokerage community, and discount brokers have been known to charge as little as 1/20 the rate of full-service brokers.

Full-service brokers have various pricing structures, and in some instances earn commissions for every single buy or sell order made. To invest online with a full-service broker, you may instead be charged a flat rate for a number of trades, but there may be other maintenance fees added to service the account. Investors at a full-service broker, however, also gain access to expert trading advice from a live broker. Most full-service brokerages have an online offering in addition to physical retail locations.

By selecting a full-service broker, investors are offered advice on investing across several asset classes, including equities, bonds, or commodities. Additionally, depending on the broker selected, multiple mutual funds will be listed as potential investments. Mutual funds are baskets of stocks overseen by an investment adviser. Investors can buy into in mutual funds independent of a broker, but most stock trades must be facilitated by a broker.

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