Many beginning investors have questions about buying stocks online.
They wonder how one selects an online broker to trade with and how to
find the best deals on trades. Here are some honest answers to these
and other frequently asked questions that beginning investors have
about buying stocks online. Hopefully after reading this you'll get a
better idea about how buying stocks online works.
Q: How do you begin your search for an online broker?
A: The first thing you should do is have an investment plan in place. It's essential to know and understand what your investment goals are and what steps you're willing to take to reach those goals because this knowledge will help you find more efficiently an online broker who will best meet your needs.
Q: Okay. I know what I want my investments to do, now what?
A: After you have your investment plan in place, do some research. Look for online brokers who can help you meet your investment goals by studying their products, services and reputation. An honest online broker will be completely open about what they can (and can't) do for you and they will be 100% clear about the fees they charge. Good firms will charge low fees on trades and on maintaining your account with the firm.
Many online brokers also have free stock research portals and links to personal advisors on their websites. A good online firm will provide these services for free or at a very low cost. Check them out and see if the information they present is easily accessible and usable.
When you're done with this research you should have a clear idea of the firms who can help you reach your investment goals before you actually start buying stocks.
Q: After you've chosen the firm you wish to work with, what happens next? How should I start buying stocks online?
A: When you're first starting out, start slowly with money that isn't essential to your survival. Start with the minimum amount that's allowed to open the account to get a feel for how stocks are purchased and sold on the website and how their services work. This will help you remove most of the early risk that's involved trading stocks online. Many people jump in too quickly and make mistakes because they don't know how the site works or how to properly execute trades. Once you learn how to execute trades correctly and understand the transaction fees involved, you may add more money and conduct business more quickly.
Q: Okay. Now that I know how to use the site, when can I go 100% all in?
A: Don't rush things. It's better to gradually work your way up until you get your first statement from the firm to see how you're portfolio is performing with the firm before going 100% all in. This will help you see if you're getting your money's worth from the firm's services and if your portfolio is performing as you'd like it to.