Investing Online (Part 1)

Investing online is easy, even if you are a beginner investor. To get started, this is all you have to do:

Choose An Online Brokerage. There are many things to look for in an online broker, but these are the most important.

• Reliability. Most online brokerages have strong reliability ratings, but to make sure, check out the reviews of each brokerage by third parties. You can find ratings in many money and consumer related magazines, including their online versions. Do a search for "online brokerage reviews".
• Execution. It is very important that when you place a trade order, that it is executed in an extremely timely manner. To find out how fast different brokerages execute trades, you can also read reviews, or visit their site and see their execution guarantees.
• Breadth of Investments. Perhaps one of the most important aspects is the breadth of investing options that your online brokerage provides. Before you sign up, browse through the broker's site and view all of the different investments that you can purchase. Look specifically at the choice in mutual funds. Some brokers only provide limited options and others allow access to almost any mutual fund out there. Typically, the larger the brokerage, the more investing options they can provide. Also, the more discounted the broker is, the less options they provide. Besides mutual funds, look to see what they offer for bond investments, options and money market funds.
• Diversity of Products. Similar to breadth of investments, you want to make sure that your online brokerage offers all the products you'll need in the future. Look to see that they offer investing in stocks, bonds, mutual funds, options, exchange traded funds (ETF) and money market accounts. On top of that, see if they also offer checks and atm/debit cards related to your account (easy ways to get money out). Some online brokers even offer separate bank accounts that can be tied to your brokerage account, and some even offer mortgages or home equity lines of credit. If you use all or several of the products, many brokerages offer discounts.
• Pricing. Although pricing is important, unless you're a day trader the actual cost of doing a trade really shouldn't be your final decision maker. That's because a typical long-term investor only makes a few trades a month or year. And if you need to spend an extra few dollars for your trades but get better service and more investment options, then I would recommend paying for the better options.
• Account Minimums. Check the account minimums for each online broker you're investigating. Some are as low as $100 and some are $10,000. Check to see the minimum amount before you are charged a maintenance fee (fee charged if your balance is below a certain dollar value).
• Rates. Look at the interest rates offered by the brokerage for their money market accounts. If you are planning to hold a lot of cash in your account, this rate is very important. They can vary dramatically, but typically the more money you have invested, the higher the rate paid. Also, look at the margin interest rates (the rate charged on money you borrow from the brokerage). These rates can be astronomical for some brokerages.
• Fees. Look for any fees that the brokerage may charge. A good brokerage should not charge any annual fees, maintenance fees or sales loads. Look closely at the website for any hidden fees and make sure you avoid them.
• Investment Research. Look for online investing companies that offer free or reduced price research. Although you don't need this research, and it is often tainted by the person or firm who wrote it, it is often helpful to see the information from another perspective.

-- ABC Stock Investment --
To be continued...