What you should know before you open an account.
More than 70 percent of investors around the globe use the Internet to buy and sell securities1. Online investing can be faster, more convenient, and more affordable than other methods. However, before you decide to manage your own investment portfolio online, there are a few questions you should ask yourself:
What kind of investor are you? Online investing isn’t for everyone. By going this route, you carry the responsibility for researching all investments and making all of the investment decisions in your online account. If you don’t feel you have the necessary knowledge or time to be that type of investor, you might be more comfortable working with a Financial Advisor. However, if you prefer to direct your own investment portfolio and are confident that you have the requisite investment knowledge, you may want to consider online investing.
“Online investing can be a rewarding way to set and reach financial goals. ”
- What kind of account do you want to open? There are a number of different online accounts to choose from, including individual or joint accounts, a custodial account for your child, educational IRAs and different types of retirement accounts. The type of account you choose will depend on the objectives you have for the money you are investing.
- Which companies and types of securities are you interested in? For self-directed investors it pays to do your homework. There is some degree of risk associated with all types of investments, so before buying an individual security, mutual fund or exchange traded fund (ETF) you will want to conduct some research. For an individual stock, among other considerations you will want to study the company’s earnings and growth potential. For an individual bond, you will want to determine the credit worthiness of the bond issuer. Before purchasing a mutual fund you will want to review the manager’s track record, associated fees and expenses. Before purchasing an ETF, you will want to research the sector or the index the ETF tracks. Learning some basic online investing technology may be helpful.
If online investing suits your needs, this approach may be a way to help grow your portfolio.