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You Need a Level Playing Field

Traditionally, buying stocks through a broker meant pinching and saving your pennies for many years before being able to invest in the stock market. If you did not have the money to get started and you wanted to get started quickly, you needed to borrow money, or even buy stocks on credit. This is better known as “buying on the margin.” With the ease and convenience of the World Wide Web, however, the playing field has been leveled, allowing most anyone to enter the stock market with less money than before. However, in order to avoid losing your shirt, you need to have a basic knowledge of investing before attempting to invest online. Here are some tips:

Buy Direct

There is one method of investing that is not talked about or marketed much because it does not earn money for brokerages, which is buying stock directly through the company itself, or through a stock management site such as ComputerShare.com. Many large companies allow this, and the cost of entrance is quite a bit lower than if you were to start investing with a broker—online or offline. In fact, you can get started with as little as $ 250, and with minimal ongoing investments of $ 25 per month. Investing this way will help you avoid the traditional fees and commissions that are normally associated with using a brokerage, and will allow you to keep more of your money. If you are just getting off the ground with investing, this could be the way to go. Please study up on investing before you explore this option.

Brokers Can Help

As with anything you choose to do in life, if you do not understand how to do it, you will need assistance with the activity. Put simply, if you don't know how to properly invest, you'll need to find a reputable and honest broker to help you. Now by reputable and honest, that means there are brokers who don't care, and will invest without your interests in mind and leave you bankrupt. They mostly have their own interests in mind when they push you to invest in something you do not understand. Keep in mind that, according to the Securities Exchange Commission (SEC), brokers are not allowed to sell you any investment or product that you cannot reasonably afford.

You'll need to borrow money just to survive if you decide to invest with a cheating broker. So it is imperative that you interview each one thoroughly before you hire a broker to handle your money. Also, many brokerages are going online, with many available that are claiming to be better than any other company. Research as many as you can before you choose.

Watch Fees!

Know the fees that are associated with your account, as many times, brokers do not want to discuss them with you. They may not know some of the fees, and that's because they're told what to tell you. Only those that actually set up the products know all the fees. Don't assume the fees you are quoted originally are going to stay the same. One online brokerage, in their fine print, states, “We reserve the right to add, remove or change brokerage charges as deemed necessary." Part of the rules of the SEC, you are entitled to know about any fees being changed at least 30 days in advance. But keep track of the charges assessed anyhow, or you will be losing more of your money than you realize.

Do Your Homework

The best protection against the need to borrow more and more money to invest is to do complete and thorough research on any company or brokerage. Learn how to read a prospectus, including the jargon that may confuse you. If you don't know what a term means, Investopedia.com has an extensive glossary and investment beginner articles to help you out.

You must also learn what the difference is between the market value of the share price and the actual value. These are not the same, as the market value is always based on the emotions of investors, while the actual share value is based on the company itself, or rather the price-to-earnings ratio. Put simply, the more a company makes, the higher the price per share is.

Everyone has to borrow money occasionally, but when it comes to investing online, the less you borrow, the more you can make.

Tags: borrow money, borrow money online, buy stocks online, invest online, online brokers