and news groups and on message boards.
Online accounts should be insured by the Securities Investor Protection Corp. (SIPC), and most usually say so on the home page or within the first screen. You may also want to check what kind of insurance the broker provides beyond that of the SIPC. Insurance information should be easy to find on the company’s site or the firm should be able to provide that information to anyone who calls them.
While you are surfing a broker’s site, make sure you pay attention to the design and content. Was the sight easy to navigate or was it low on content and bogged down with heavy graphics? For many investors, time is money and getting lost in a Web site or having your screen freeze while downloading heavy graphics is not conducive to maximizing your investment potential.
Several sites allow surfers to make demo or mock trades. This allows potential investors to go through the motions and get a feel for what actually happens when they want to trade. Once you have opened an account, you are given a customer ID and PIN, which allow you to log in to the trading area. You pan then look up real-time quotes for the stocks you are interested in trading, their positions end their daily value gain or loss. You can also check the status of orders that you have already completed. You decide what kind of order you are going to make, such as an equity trade or an option, and then fill out an online order form. Soon after the trade is executed, you should be able to check your account balance and your portfolio should be updated by the end of the day.
Online investing can be a rewarding and exciting experience, but there are drawbacks. Every potential investor should read Possibilities & Pitfalls: The Internet as an Investment Tool, which is published by the regulatory branch of the National Association of Securities Dealers. It can be retrieved online at www.nasdr.com/2580.htm. The Individual Investor’s Guide to Computerized Investing ($24.95) by the American Association of Individual Investors (625 N. Michigan Ave., Chicago, Illinois 60611; 800-428-2244 or www.aaii.com) takes a thorough look at building an investment portfolio, from the nuts and bolts of investing, to software, assessments of individual services and free research sources.
Computer systems at some firms have crashed in the past, but this has become increasingly uncommon since many companies have upgraded their systems. Lee says she has only encountered minor technical problems when the system is down I for maintenance. “It’s usually only at night or on the weekend, but they usually let you know ahead of time,” she says.
Busy signals from Internet service providers can also hamper investors and delay trading activity. But the onus of investment decisions rests squarely on the investors–they must take responsib
ility for bad decisions. “You make your own decisions, good or bad,” says Barnes. “No one is there to stop you from making bad choices.”
However, for Lee and Barnes, the