How to invest and trade your money online

by Sarah Granger

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Investing in stocks, bonds and other securities is easy to do online, and it puts us in charge of our own investments.  Trading securities online is typically called electronic trading or "etrading", and is now done by hundreds of companies internationally.  Finding the system that's best for your needs, getting started, and learning how to manage these investments online is well worth the time and is becoming easier to do.

Background

With e-commerce engines cropping up everywhere for companies to complete transactions, it was only a matter of time before people would become accustomed to buying and selling investments online.  Online stock trading began in the late 1990s with Charles Schwab going online and the founding of E-Trade.  Still to this day, schwab.com and etrade.com are the two most well-known names in personal online securities trading.  Some banks, like Bank of America, have online trading programs as well.  These systems are built on robust, highly secure, technical architectures to protect customers.

Getting Started

Determining which system to use is a matter of personal preference and financial statistics.  Cost per trade depends on how much money in assets you're willing to put with the financial institution, just as checking and savings account rates vary with the amount of cash you're willing to hold with a bank.  The leaders -- schwab.com, etrade.com, and tdameritrade.com -- provide similar features for users.  Other popular online trading sites include scottrade.com, firstrade.com, and sharebuilder.com.  Many of these sites also have physical offices, so it's worth looking those up online before applying to see if there's one near you.  From there, it's a matter of comparing the look and feel of each site and the costs depending on how much you're willing and able to hold there.

Setting up an account can be time-consuming, but that's the most difficult part of online trading.  It can be done online through automatic forms, or in person at a branch office if that is preferred.  It's smart to have social security numbers and previous address information handy.  Then there's a waiting period for getting accounts configured, including depositing funds for the investments into the account.  Once those are all in and everything is approved, including the primary e-mail address on the account, you're ready.

First Timers

It's always good to do some research before choosing first investments to make.  For seasoned investors who know the funds you like, it's still worth poking around to get accustomed to the online system and all of its features.  Take advantage of the "Help" buttons and any additional training or customer service that's offered to learn all about the features.

When you're ready to invest, log in, go to the trading page of your site, and select the security acronym that you want to invest in, like TIVO or COKE.  It's a good idea to start with small transactions, like a few shares of stock, to get the hang of it.  Make sure to set a price for the stock or for the total trade amount.  After you've done, wait for a message from the system that the transaction is complete and look for e-mail in your inbox confirming the trade has been registered.  You should then receive another message once the trade is complete, with the fund price, total price paid, and commission cost.  Now you're a pro and you can watch your investment online any time.

Investment Tracking and Research

Each of the sites noted above has their own online tracking features for securities, but there are other leaders that also provide a wealth of knowledge and articles to help support your research.  Morningstar.com has great articles, free e-mail alerts, and a wide range of online features for researching investments.  Bloomberg, known for institutional trading, provides detailed content at Bloomberg.com including news, market data and investment tools.

Yahoo's finance page at finance.yahoo.com contains great resources as well.  For Blackberry and iPhone users, there are a plethora of new applications for tracking investments and reading related news on those devices.  It's also worth noting that many of the sites in this article provide training opportunities as well.  Remember to research and track before you trade, and you’re well on your way.

Additional Resources

The SEC has some important information online at their Internet and Online Trading page - http://www.sec.gov/investor/online.shtml
They also have a page focused on Online Investment tips - http://www.sec.gov/investor/pubs/onlinetips.htm