Having an online investing account is as easy as click, click, click…and you’re set to buy and sell stocks, bonds or funds you want. No waiting, no problems, right?
Because it’s so easy to invest online, many (novices and experts alike) do. But since most online brokerage firms do not offer in-depth financial advice for investors, here’s what you should know before you open an investing account and trade yourself:
- Get full disclosure about buying/selling securities and how to get your account information if you cannot access the firm’s website. (Yes, websites go down.)
- Online investors are not typically linked directly to the market, so understand a click on your part does not execute your trade immediately. Do you know the lag time?
- Have your brokerage firm substantiate advertised claims about the ease and speed of an online trade.
- Get information from the brokerage firm about how you proceed when significant outages, delays and other interruptions to trading and account access occur. What happens if your trade didn’t go through?
- Before trading, understand how to enter-and cancel-orders, especially if you have a margin account (not recommended). Do you get a confirmation for each trade?
- Know whether you get delayed or real-time stock quotes. How much is your delay? When does your account info update?
- Understand the fees, commissions and conditions you must meet to get the advertised low commissions (for which you may not qualify, but it enticed you to open an account).
- Review the firm’s privacy and security policies. Will your name be sold for mailing lists or used for promotional activities by that firm or others?
- Know how you contact a customer service rep about any concerns and request prompt attention and fair consideration.
- Contact your State Securities Administrator (every state has this agency) to protect yourself from scams and:
- verify the firm is licensed/registered,
- see history of disciplinary actions,
- find out if an investment is permitted to be sold,
- file a complaint, if you have one.
Find contact info for any State Securities Administrator at the North American State Securities Administration site, NASAA.org.