Like any type of investment or financial plan, online investing is not without its supporters or cynics. The basic premise of online investing is simple; it is much like making investments through a traditional financial planning organization, but from the comfort and privacy of your own computer. When you do anything online, you get the convenience of working anytime, anywhere, and having an incredible resource – the Internet – at your fingertips.
Why online investing is popular
In large part, online investments are popular because of the lower costs associated with making purchases, trades, and interacting with a broker or financial representative. Most people looking at making investments are already keeping an eye on their bottom line, and the opportunity to save a percentage of the fee is often enticing enough to warrant complete online interactions.
Online investing also has the advantage of being quick – which is vital in an industry where prices can change as quickly as the weather. In most cases, you also have access to information and updates on your account at all hours of the day, as well. This makes self-sufficiency in investing much easier for those who like to handle and view their own funds.
However, it is important to note that investing online comes in two primary formats: working with a broker and working without a broker. While the first option is a popular way to get the help you need making your investments, the second options carries a much larger potential for bad investments or a mishandling of your portfolio – unless you already have a good handle on how to invest for maximum return.
Still, having an online broker isn’t always the best option for new investors, either. Many brokers act as independent agents, and they often make a commission on your investment regardless of whether or not its the best course of action for your situation. When you add the anonymity of interacting solely on the web, this increases your chances of falling victim to fraud or to a less-than-ideal broker relationship.