If you’ve always wanted to invest in the stock market but don’t know much about it, figuring out where to start can be intimidating. The first step after you work out just how much you plan on investing, is to find a reputable online broker for all of your investment transactions. Do your research when choosing an online brokerage firm or company. You’ll want to know things like what their commission rate is, do they charge a fee per each transaction, and what is the fee schedule? Some online brokerage companies may offer deals like if you make ten transactions and the eleventh is free – sort of like your morning coffee club card.
Online brokers can require a minimum to set up an account. Their set-up fees can vary from $0 to $2000, so be sure to check that beforehand. Realistically, you should also define the amount you have to invest and the number of trades you plan on making per month. Usually, ten or more monthly trades can help keep commission costs down – which can run between $5 and $10 per trade. If you don’t plan on trading that often, try to stay away from brokers that charge inactivity fees. An inactivity fee is a sum charged to investors who haven’t engaged in any buying or selling activities in their brokerage accounts for an amount of time specified by the brokerage.
Online brokerage sites can offer investment advice and tools, as well as assistance from real people through email, online chat, on the phone, or, in some cases, a satellite office you can visit. If you’re looking to invest in specific companies, then individual stocks and securities are what you should look for. If you’re investing with more long-term goals in mind, then Mutual funds and ETFs (Exchange Traded Funds) might be more of what you want. Just remember that the stock market is basically high-level gambling. So, the greater the risk, the greater the reward. But if you aren’t a risk taker, than maybe a retirement account is more of what you’re looking for.
Savings and Investments
If you’re already contributing to a 401(k) from your place of employment, you should open an IRA. You can open an IRA (Individual Retirement Account) with an online broker. Don’t be in a hurry to invest it though. Keep enough in your savings account(s) so in case of an emergency, or a downturn in the market, you aren’t left in a financial tight spot because everything is locked up in investments. In some instances, a DSPP (Direct Stock Purchase Plan) can bypass the broker. A DSPP is when businesses allow investors to buy stock ownership directly from their company. Keep in mind system’s for administering DSPPs do vary. You can learn more about how to participate in a company’s DSPP by contacting their investor relations department.
Lastly, the purpose of trading online is for convenience. So, before you decide on an online broker, check out their websites and smart phone apps. Most are fairly simple and straight forward. There are some that can be overly complicated and difficult to navigate though. So, take that into consideration and don’t hesitate to call tech support if you do have problems with a website or app. Someone at the brokerage firm will be able to walk you through troubleshooting any difficulties and help you learn the features of using it. Good Luck!