You probably know that one of the best ways to help your money grow is to invest in the stock market. This is because the stock market offers returns that are usually higher than cash or bonds. Additionally, stocks are considered less risky by many experts than other investments, like commodities or currencies. Many Boomers find that they can enjoy reasonable returns when trading with stocks. And, thanks to technology, it is possible to trade stocks from the comfort of your home.
Choosing an Online Discount Brokerage
The first thing you need to do in order to trade stocks online is decide on a brokerage. There are a number of discount brokerages that offer transactions at discount rates. Many of these brokerages simply charge a flat fee for your trades, instead of taking a percentage of your account earnings or assets. This can save you money in the long run, ensuring that you keep more of your returns.
Before deciding on a discount brokerage, though, you need to do your homework. Consider price, but also what is available. If you like to trade frequently, then you might need an account with a few more features and tools. Additionally, you might want to look for an account with a lower per-transaction rate, or one that offers a specific number of free trades if you keep a certain account minimum. For those who are interested in buy and hold investing, more basic accounts might be preferred.
Make sure that you consider your stock trading needs, and look for a discount broker that meets your needs. A discount brokerage that provides good research tools can also be quite helpful. Since you will be choosing your own investments, in-depth tools that help you make better decisions are a must. Also consider the products you want to invest in, from IRAs to mutual funds to domestic stocks to foreign stocks. Choose a discount broker that offers the products you want.
Opening an Account at a Discount Brokerage
Once you know what you are looking for, and once you decide which broker to use, it’s time to open an account. In most cases, you can actually open and account and start trading entirely online. It may take a few days for your account to be approved, and for money from your bank to fund the trading account, but you can generally get started fairly quickly. Things you will need to open an online stock trading account include:
- Full name
- Social Security Number
- Driver’s license number
- Bank account number and routing number to fund the account
- Idea of what you want to invest in
If you are interested in investing regularly, you can set up an automatic withdrawal from your bank account so that your discount brokerage account is regularly funded. Then, it is usually possible to set up your account so that you buy shares in a stock or fund regularly. This can help you automate your investing, and put dollar cost averaging to work for you.
You can also engage in real time trading, although this can cost more, and frequent trades can mean transaction fees cut into your earnings. However, if you have a system set up, it can be exciting to engage in day trading. Just remember that there are risks involved in stock trading, and that there is the possibility of loss.
Need to open an investing account? Here are review posts on your options as well as links to open an account: