Online Investing Tips for the New Investor
Whether you are new to online investing or you need a refresher, below are some tips to get you started or to get you back into the game.
1) Read the Fine Print – You may decide to go with an online discount broker instead of a full-service broker to keep your costs down. That is definitely okay, but you must read the fine print and be sure that while the advertised cost is lower, there may be other fees here and there that can add up. This is especially true if you do a lot of buying and selling frequently.
2) There are also many types of brokers available. These include commodities brokers, futures brokers, forex brokers, and investment brokers. Be sure that the broker you select is qualified and that he or she specializes in your area of trading.
3) Begin online investing with a very small amount of money. If you are new to online trading and investing, be sure that you only initially sacrifice a small portion of money. Once you are more comfortable and can turn a profit, then begin using larger amounts of money.
4) Portfolio diversification is a must when online investing. Don’t concentrate on just one method of investing, but rather look into other types of investments such as hedge funds, mutual fund investing, or perhaps real estate investment trusts (REIT). You should also take into account your risk tolerance as well so that you are comfortable in your investment decisions and can actually sleep at night!
5) Speaking of investing in mutual funds, many investors opt to add mutual funds to build a strong portfolio. Mutual funds allow you to take a back seat when you may not have the knowledge required to invest in individual stocks. You have the benefit of making money through online investing, but with another person making the decisions for you.
6) Before you begin to sell and buy stock, be sure that you understand the tax implications. The federal capital gains will jump up and bite you if you are trading on a larger scale. This may be okay for some investors, but new investors should research the tax implications before they begin online investing.
7) Things will go wrong and often do. The sooner you resolve yourself to this, the better off you will be. Make the most of your mistakes and don’t succumb to trading anxiety felt by many investors. There will also be things that happen that are completely out of your power, such as software glitches in your chosen trading software, or potential server crashes of your online brokerage firm. The world is not perfect and problems are inevitable!
8) Lastly, you must always be on top of your game. You must stay informed regarding trends and those companies that you have invested in. Check out the company’s prospectus, their public filings, and never rely on the “supposed” hot stock market picks.
I think the above information will get you well on your way to begin online investing. There is obviously much more information for you to learn before you begin investing, but hopefully this information will give you a good place to start. Do your research so that you avoid making investing mistakes and remember to stay focused. Good luck and study hard!