Saturday, February 9, 2008

Tips for Online Investing

The following tips were developed by the North American Securities Administrators Association, Inc. to educate investors and to help them think carefully about online investing.

Before beginning an online investment program, be sure to:

Understand that most likely you are not linked directly to the market through your home computer, and that the click of your mouse does not instantly execute trades or cancel orders.
Determine if the stock quotes and account updates you receive are real-time or delayed.
Check the on-line broker’s ability to get the best price for investors. Most brokerage firms provide this information on their website.
Receive information from the firm to substantiate any advertised claims concerning the ease and speed of online trading.
Obtain information about entering and canceling orders (market, limit, and stop loss), and the details and risks of margin accounts (borrowing to buy stocks).
Get information from the firm about significant website outages, delays, and other interruptions that may affect your ability to execute trades. Make sure that the firm has an alternative way to execute trades.
Review the firm’s privacy and security policies. Determine if your name will be used for mailing lists or other promotional activities by the firm or any other party.
Receive clear information about sales commissions, transaction fees, and conditions that apply to any advertised discount on commissions.
Know how to contact a customer service representative if problems occur. Request prompt attention and fair consideration. Be sure to keep good records to substantiate any problems that may occur.
Contact your local securities division to verify the registration status and disciplinary history (if any) of the online brokerage firm, or to file a complaint, if appropriate.

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