Online Brokerage Firms
By Jayme Hanson

Before you invest with online brokerage firms, you need to do your research. If you are new to investing and especially investing online, don’t invest your entire savings into an online account. You will want to start with a small amount of money. Once you have built up your confidence and knowledge level then you can begin to invest more money.

Online brokerage firms should provide stocks that deal specifically with large cap domestic stocks. These types of stocks should make up part of your investment portfolio, but not all of it. You will need to take into account your risk tolerance and your time horizon to develop a well rounded portfolio of stocks, bonds and cash.

Mutual funds are a good investment for most investors because you don’t need the expertise to make your own investment calls on individual stocks. Most online brokerage firms should advise you that it is an unwise move for you to cash out your long-term

holdings so that you can start playing the market in individual stocks.

Even if online brokerage firm’s costs are lower than those of full-service brokers, the costs can still add up, especially if you decide to do a lot of buying and selling. Online brokerage firms also charge a number of different fees for you to establish an account and start trading that you will want to investigate during your due diligence.

Just remember that trading online can have its own set of problems. For example, there will be times when you can’t access your account because your Internet connection is down or maybe the market makes a significant move while you are away from your computer. Most online brokerage firms will have additional options such as automated telephone trading or calling a broker for trading. Before you invest with any online brokerage firms, do your homework first and find out as much as you can about the company.