Buy Stocks Online - Pros and Cons
While it used to be that only a small percentage of people invested in stocks, today that is no longer true.
With the bailouts that the US government handed out over the past couple of years, every US tax payer is now a proud owner of stocks.
Most of us probably don't think about stock ownership that way.
We prefer to have the stocks owned in our name.
Somewhere we can make the decision on buying and selling without having to wait on Uncle Sam to do it.
With stock ownership changing dramatically, the way you buy stocks has changed as well.
Historically only a small number of brokers were allowed to buy and sell stocks.
You were required to call them to discuss any transactions.
They primarily functioned as wealth advisors as well as stock brokers.
Now many people invest in the stock market that don't need or can't afford a wealth adviser or full service stock broker.
Luckily the internet has solved a lot of those issues.
It has provided a low friction method of allowing discount stock brokers to provide the service to many people who may not have had the opportunity to own stocks directly before.
By owning stocks directly I mean outside of their work's 401k or other work related retirement plans.
The most common way is for people to buy stocks online.
It does take a little bit of time to sort through the variety of discount brokers that are available.
Each one brings its own set of pros and cons to the table.
One of the biggest benefits to using an online discount broker is that transaction fees are significantly lower.
The cost to use a full service broker can make trading stocks extremely expensive.
Using a discount broker allows you to lower your transaction costs.
This allows you to make more money on your trades and to react quickly when needed.
Now the downside to the lower transaction costs and the ability to buy and sell quickly is that many people will tend to over trade.
Warren Buffet even suggests people should only invest in mutual funds because they are harder to sell quickly.
It is something to be aware of when you are creating your strategy for investing in the stock market.
Just remember when you are evaluating the different brokers that you understand how you plan on using them.
You may find that what is perfect for someone else is not the best solution for you.
Be aware of how it all fits together.
Regardless of what anyone tells you, there is not perfect system and nothing is full proof.
Find the time to learn and educate yourself.
It is the only way I know to improve your odds of creating a significant amount of wealth in your life.
With the bailouts that the US government handed out over the past couple of years, every US tax payer is now a proud owner of stocks.
Most of us probably don't think about stock ownership that way.
We prefer to have the stocks owned in our name.
Somewhere we can make the decision on buying and selling without having to wait on Uncle Sam to do it.
With stock ownership changing dramatically, the way you buy stocks has changed as well.
Historically only a small number of brokers were allowed to buy and sell stocks.
You were required to call them to discuss any transactions.
They primarily functioned as wealth advisors as well as stock brokers.
Now many people invest in the stock market that don't need or can't afford a wealth adviser or full service stock broker.
Luckily the internet has solved a lot of those issues.
It has provided a low friction method of allowing discount stock brokers to provide the service to many people who may not have had the opportunity to own stocks directly before.
By owning stocks directly I mean outside of their work's 401k or other work related retirement plans.
The most common way is for people to buy stocks online.
It does take a little bit of time to sort through the variety of discount brokers that are available.
Each one brings its own set of pros and cons to the table.
One of the biggest benefits to using an online discount broker is that transaction fees are significantly lower.
The cost to use a full service broker can make trading stocks extremely expensive.
Using a discount broker allows you to lower your transaction costs.
This allows you to make more money on your trades and to react quickly when needed.
Now the downside to the lower transaction costs and the ability to buy and sell quickly is that many people will tend to over trade.
Warren Buffet even suggests people should only invest in mutual funds because they are harder to sell quickly.
It is something to be aware of when you are creating your strategy for investing in the stock market.
Just remember when you are evaluating the different brokers that you understand how you plan on using them.
You may find that what is perfect for someone else is not the best solution for you.
Be aware of how it all fits together.
Regardless of what anyone tells you, there is not perfect system and nothing is full proof.
Find the time to learn and educate yourself.
It is the only way I know to improve your odds of creating a significant amount of wealth in your life.
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