- Online discount brokerage firms have sprung up and have put individual investors in the driver's seat. There is a plethora of online brokerage firms that give the individual investor many choices when it comes to investing, be it for retirement or long-term savings. This may be confusing for the beginning investor, but keeping it simple is the best way to go. It also means that as a beginning investor, you don't have to have thousands of dollars stacked away. You can start with very little.
- E*Trade, ShareBuilder, Fidelity and TD Ameritrade are a few good examples of online brokerages. These companies charge between $4 and $20 for each trade. ShareBuilder has the added advantage of being a dollar-based brokerage, not a share-based brokerage. You can, for a fixed fee, automatically invest a fixed amount of money every month to buy a particular stock or group of stocks over time. There is no minimum required amount to open an investment account. This is especially helpful if you do not have much to invest, but consistency overtime with the magic of compound interest will build you a sizable nest egg.
- In addition, there are a number of investing education companies, which specialize in teaching the individual investor to become better at studying stocks, reading charts and performing technical analysis. One such company is Investools. There are also a number of sites, like Think or Swim, that allow you to practice trading with fake money until such you are comfortable to put real money in the stock market.
- One important factor in investing in the stock market is diversification. This will help beginners maximize their gains and minimize their risks. The simplest way to diversity is to invest in Exchange Traded Funds (ETFs). They resemble mutual funds in that they contain a basket of stocks, but unlike mutual funds, the cost involved in investing in ETFs is much lower.
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