Wednesday, June 25, 2008

Online Trading-Comparing Brokers

Online investing a.k.a. Do It Yourself investing has been gaining in popularity. You might even feel left out if you're not into it. But is it for you? This week we'll explore the basics of online investing.

There are many, many online brokers out their in webland. Before choosing a broker it's good to take a look at several, compare their features and search for reviews from trusted sources.

The top broker sites as rated by Smart Money's recent comparison are:
Ameritrade (TD Pricewaterhouse)
Muriel Siebert
Scott Trade
Interactive Brokers

Click to enlarge the chart below for a feature comparison of Fidelity, E*Trade and AmeriTrade. You can further use this chart as a checklist for any online broker you might be considering.

The list above is not a good vs. bad. For example whether a company offers virtual tours or online chat should not be the main determinant of choosing them. Look at the fees, types of trades and features that may be personally important to you. I like a fast guarantee.

Beyond this list I usually look at the user interface. Interface preferences can be different for everyone, but it's got to be easy to discern and navigate. Many sites tend to be overwhelmingly complicated. When you're new to do-it-yourself trading the last thing you need is visual pollution to make the process intimidating.

As with anything else you've got to do the homework. A big company may offer more security, sophistication and wide fund selection. But you might think their fees are too steep. Know what you are getting into before you sign-up.

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