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Investing 101 : How to Get Started with Online Investing
This tutorial, written by Rich Best, that we call “investing 101″ will give you all of the basic information that you need to know to begin trading online within an hour or so. You will learn how to open an account, choose the best company to trade with, how to buy and sell stocks and much more.
The tutorial is loosely laid out so that you can easily find the sections that most interest you in the least amount of time. If your totally new to investing, we suggest that you read each article, in sequence, so that you can develop a broader understanding of online investing before you begin trading.
Investing 101. With the advent of online brokers, it has never been easier, or cheaper, for investors to establish an account and begin acquiring equities. Quite literally, it’s as easy to buy stocks online as it is to buy a book on Amazon. The difference is that, when you buy a book, your purchase price is your maximum investment and there is no downside risk (other than if you don’t like the book).
With online investing, you can control your maximum investment, but your downside risk is largely controlled by the market (although you can apply strategies to reduce your overall risk). So, it is important to go into online investing with much more preparation than you would need for buying a book.
The actual steps to beginning online investing are simple:
- Choose an online broker
- Create an account (you’ll need to provide a lot of information about your finances)
- Place an order
We don’t mean to oversimplify it, but that really is all there is to getting started. But, if you truly want to avoid costly mistakes, you will need to do much more preparation before you commit your funds. It’s important to go into online investing with your eyes wide open, and that means having a foundation of knowledge on investing and the online brokerage community.
Most people choose to invest online because they prefer to act independently without having to interact with a stockbroker. They are also seeking to invest at the lowest possible cost. Online brokers provide investors with the ability buy and sell securities and they don’t provide investment advice, which is why they can offer transactions at low flat rates. Essentially, the responsibility for researching and monitoring your investments falls squarely on your shoulders. While that may seem daunting to many people, you have a great resource in the Internet. The first step you need to take is to research online brokers.
Investing 101 – Choosing an Online Broker
As with most products and services available on the Internet, there is a wide variety from which to choose, and there is no one product that fits all. When choosing an online broker, the most important consideration you should have when comparing them are your own preferences and priorities. Because online brokers vary in the range of fees they charge as well as the level of services they provide, you will need to evaluate them in light of your own situation. If you are seeking the lowest possible fees, you may have to sacrifice the quality of research or web navigation.
Conversely, if research and greater access to helpful investing tools are a priority, you may pay a higher transaction fee. A lot depends on the amount you have to invest and your anticipated trading activity. Some brokers charge less for higher account deposits or more frequent trade activity. Live broker access is important to some people and that is not available with all online brokers. Have your preferences and priorities clearly defined before you conduct your search. For more information on choosing an online broker see, Comparing Online Brokers.
Investing 101 – Do your Homework
No one should invest in the stock market without a solid foundation of knowledge in how the stock market works. Selecting stocks or mutual funds is not an exact science, but understanding what drives market prices and how to invest for diversification can go a long ways towards easing the bumps in the road. It is important to latch on to a few, well established investing sites, such as Kiplinger.com, for learning and maintaining the essential knowledge needed in the dynamic world of investments.
More importantly, do your homework on your specific investment objectives. It’s never advisable to begin investing without clear targets and a firm grasp of your risk tolerance.
Investing 101 Tutorial – Sponsored by E*Trade
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