Tips for Online Investing

We all constantly receive many online investing tips and in actual fact, everyone can benefit from these tips.  Most people are new to online investing and are not familiar with the whole process.  Online investing can be very cruel, but also very lucrative and rewarding. When it comes to investing online, the tips you will find below are there to help you take advantage of your experiences. 

** It must be noted that this should not be taken as financial advice, so we do advise you consult with your financial planner/advisor prior to proceeding.

Start Small – as you are new to online investing, the key thing to do is to start small.  If you are new to this form of investing, don’t put your life savings into a single online account (or investment method) and wish for the best.  Start with a smaller amount of money, which will be easier to handle and keep track of.  Once you build up your experience and  your confidence grows, you can then add more money to your online account/investment.

Once online, most investors tend to concentrate on stocks, specifically larger (blue chip companies) and domestic.  Although stocks should make up a significant part of your portfolio, they shouldn’t make up your entire portfolio.  Also make sure you do understand and take into account your time horizon and risk tolerance to help develop a well balanced portfolio of stocks, bonds, mutual funds, properties and cash.

Mutual Funds - when it comes to mutual funds (managed funds), most investors get into them for a reason.  Investors don’t have the expertise to investment on their own on individual stocks and don’t have the time to keep an eye on the stock market to ensure their stocks are performing.  Mutual Funds are however a good place to invest some of your money and although their fees may be high, your longer term returns should outperform just holding cash.  Remember, they should be seen as long term investments, held over 7 years.

Online investment tips do also state that the costs may not always be obvious when investing in stocks or even mutual funds.  Even though online broker costs are somewhat lower than those of full service brokers, they can and do add up, even if you do a lot of buying and selling. Online broker firms also like to impose a number of other fees and charges that should be studied closely.

Every order you place must work for you, otherwise it is not worth investing in the first place.  If you plan to do your own investing, you need to learn how to use the tools that are available in order to avoid potentially high losses and to buy or sell stocks at good prices. This will help you make a good return on your investment.

Remember, investing online is not foolproof.  There will be times when you can’t log into your account or you may be away from your computer when the market makes a major move (up or down).  Your internet connection could also be down or the online broker’s server could be down (crashed due to excessive load) or experiencing some unexpected software bugs.  Make sure you become familiar with your broker’s alternative trading options if an unforseen problem did arise. This may include automated telephone trading or simply ringing a broker.

The most important online investment tip is to always remember that information is power.  The more you know, the more informed your investment choice/decision will be.  If you decide to buy & sell individual stocks online or invest in mutual funds or even in cash (ie. online high interest bearing accounts) or yielding , it is in your best interest to keep yourself as well informed as possible.  Remember, if someone offers you a “hot buy” or a “hot stock”, take the time to investigate it prior to investing your hard earned cash, as such tips can be good, however can also be bad.

In summary, online investing can provide you with some great returns, however make sure you do your due diligence & research research research!!!  Also, as per any form of investment, diversify & don’t put all your eggs in one basket (ie. rather than investing $10,000 on one stock, you can invest $1,000 on 10 stocks OR $7,000 on 7 stocks & $3,000 in a mutual fund, etc.).

Good Luck & Happy Online Investing!!!