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The Basics of Investing in Stock Online
The act of investing in stock online in itself is a very simple process as long as your have done proper research, which is where all the work lies. Here is a summary of how invest stock online works.
- You research the companies in which you may be interested in investing. There are various online sites that have information on all publicly traded companies and these can serve as a resource. Examples include, Yahoo Finance, Bloomberg and Motley Fool.
- Then you set up an online brokerage account as this will allow you to buy and sell shares of companies that are traded on the stock market.
- Next you fund your brokerage account by linking it to an existing checking account.
- Finally begin buying and selling your shares when you are ready to take the plunge.
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Choosing an Online Broker
As stated earlier you will need to open an online brokerage account in order to invest using the internet. Like traditional brokers of old, online brokerage firms or discount brokers as they are often called, serve as a liaison between you and the stock market by placing trades on your behalf. Unlike traditional brokers, you don't have to place a call to an actual person before you make an investment. You can do that yourself from the comfort of your desk or other internet-connecting device. Many online brokerage companies will charge you a nominal fee for this service. There may be a monthly service fee as well as an extra charge of about $4 to $15 per trade. For example Sharebuilder, which provides some of the best value when it comes to online brokerage accounts, charges $4 per trade (basic account) without a monthly fee and there is no minimum amount required to open an account. For $12 a month (advantage account) you get 12 trades each month and each additional trade costs $1. Other discount brokers include Schwabb, Scottrade and E*Trade. When choosing an online broker make sure you research your options and pay attention to hidden fees as these can add up.
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Little Drops Make an Ocean
One of the advantages of online self-directed investing is that you do not have to buy large blocks of shares worth thousands of dollars before you can invest in stock online. Most discount brokers allow you to invest small fixed or varying amounts each month, which are then distributed evenly to purchase shares of stocks you already specified. If you set this up to happen automatically (and some discount brokers like Sharebuilder provide incentives for you to choose this option), then those little drops can become an ocean in no time.
You can use this kind of online self-directed investing for standalone investment accounts, Individual Retirement Accounts (IRAs), Roth IRAs or college savings investment funds.