Investing online - Day traders and othersWritten by Jakob Jelling
With inception of Internet, many people experienced and inexperienced in stock trading have begun signing up with online trading companies and buying and trading their own stocks. Investing online in this manner is growing in popularity, especially with sometimes-apocryphal stories of people who’ve made tons of money doing it. But how do you know what stocks are right for you? How do you start? How do you keep from losing your shirt investing online? First, start small. View your first few months as a learning experience, and only invest online with money you can afford to lose. Smaller sums are easier to handle and track, and manipulating smaller amounts will get you used to how online exchanges work. Only when you’re very confident with money you’re investing should you add more money to your account. Diversification is as important to investing online as it is to investing in regular stocks. Make sure you purchase stocks with a wide variety of risk, in a wide variety of industries. The more you spread your money around more you reduce your risk. You should learn as much as you can about where you’re putting your stocks, and keep up with what’s going on with those companies. Many online trading companies offer some great news resources, so you can keep up with latest developments in your companies and your industries; but you can also use Yahoo news and other online news services to search for information on your stock holdings. Hold onto mutual funds, even when you’re investing online in great stocks. Mutual funds are a great form of stock market insurance. They’re invested by professionals who have time to keep up with all industry trends. View your online investing as a way to make extra money with money you can afford to lose. Although costs listed on online brokerages may seem low, associated fees, especially with multiple trades, can be significant. Know what your chosen online services will really cost you before investing online. You should also know rules concerning capital gains tax and other federal and state rules that may affect your profits.
| | Index investing - Going by the numbersWritten by Jakob Jelling
The Dow, NASDAQ, S&P 500 – these are stock indexes, company structures that keep track of values of listed stocks and enable brokers and others to trade in them. Index investing involves holding a portfolio of stocks or a mutual fund spread across an index, so that value of stocks is relatively equivalent to value of index at any given time.The three big funds aren’t only indexes available for investing; there are thousands of others, including not only American-based indexes but indexes specific to other countries and international indexes. When looking at index investing, you should keep in mind wide variety of possibilities for your invested cash. The most significant advantage to index investing is that it’s easy to diversify your investments, reducing your risk for losing money. Index funds also have a lower expense ratio than other types of mutual funds, which ensures that you’ll be able to keep more of your money. Although index investing seems to be hard to target to your areas of interest, it’s actually easier than you think. For instance, if your interest is in tech stocks, your index investing choice is a NASDAQ fund. If you believe that a market in another country, say India or South Korea, is getting ready to take off, then you invest in a fund from an index based in that country. You have more choice than you might think.
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