Want to buy stocks online but don’t know where to start? I know from personal experience that it can be a little intimidating to try to sift through all the online stock brokers on the Internet, but their prices can’t be beat, so it’s worth a little investigation.
The brief history of buying stocks online
As time has passed and online discount broker competition has continued to heat up exponentially, we the stock-buying public have been the beneficiaries. Minimum accounts, commissions, other fees, all have trended downward consistently over the 10 or so years that it has been possible to buy stocks online. At the same time, the increase in online brokers has made things a little more complicated in determining who you’re going to invest through.
(Some investors even buy penny stock online. They are either the brave or the stupid, depending I guess on the outcome of their "market speculations". That is not the focus of our topic here, though.)
Is it safe?
Is it safe to buy stocks online? Yes, it is. Your account is insured up to $500,000 by the Securities Investor Protection Corp (SIPC). This is the same protection you would receive if you were to buy stocks through a “normal” broker. Understand that any online broker big enough to advertise is legit and has had to pass through stringent examination and continues to have to do so in order to be allowed to buy stock with your money.
Who are the best discount brokers?
This is too complicated a question to get into in detail in this post. You should take a look at the very helpful Stocks For Dummies for many insightful beginner hints on trading the stock market. I also suggest you visit the companies’ pages before you buy stocks online through them. Take notes, compare, and think about how you plan to invest. Are you going to be buying stock daily, weekly, monthly, quarterly? What amounts will you be purchasing at a time? Do you need to have access to small-cap or obscure stocks? Online brokers may or may not be able to buy those stocks for you. Each discount broker caters to a little different type of investor (or trader).
In the meantime, you should check out these 5 discount brokers and see which one seems like the best fit for you:
As is always the case in investing, the ancient axiom “Know Thyself” is particularly important in selecting an online broker. You will have to determine what will be your most likely style of buying and also who will serve you best, for the least. But then again, over-thinking can morph into paralysis. So be wise when you buy stocks online and avoid Pink Floyd’s “10 years have got behind” curse.