Things You Should Know Before Investing Online

Can You Earn Money from Online Investment?

        

      People think that their money is safe in the bank, and that they don't have to do anything with their savings. Well, here's an unpleasant truth: by leaving money in the bank and not investing it, you actually lose money every year, up to about 3% in most developed countries. This is because of the inflation effect.

Here's how inflation works. A dollar today will buy more products than a dollar next year, and its effects add up over the years.

Online Trading is Fast and Easy

With just a click of the mouse, you can buy and sell shares from over 100 online brokers offering executions as low as $5 per transaction. While online trading saves investors time and money, it doesn't take away the homework of making investment decisions. You may be able to place a trade in nanoseconds, but making wise investment decisions takes time. Before you trade, know why you are buying or selling, as well as your investment risk.

Determine Your Willingness for Risk

No human can predict what will happen to the market in the future. Instead of trying to achieve the right return over time, I prefer to put my investments into three groups.

1. High risk investment

Average annual return: minus-5% to 10%

Strong return: 20% or better

Bad returns: minus-15% or worse

Initial principal risk: High

Examples of investments: commodities, penny stocks, Real estate, high yield bonds, venture capital, private equity, cryptocurrencies

2. Average risk investments
Average annual return: 3% to 8%
Strong return: 12% or better
Poor return: 0% or worse
Risk of initial principal: Partial
Investment examples: index funds, ETFs,  Stocks,  corporate bonds

3. Low risk investments
Average annual return: 1% to 2%
Strong return: 3%
Poor return: 0%
Risk of initial principal: Little to none
Investment examples: bonds, CDs, Municipal bonds, s money market funds, bank savings accounts

Online Investing Platform Types

1. Full service brokers have higher fees than discount brokers, but basically they manage your investment portfolio for you. They also typically require higher account minimums – usually $50,000 or more – than discount brokers, who often have no minimum account balance at all. When you submit your portfolio to a full-service broker, they determine the allocation of your portfolio, rebalance it periodically, and handle all the buying and selling of securities in the process.

2. Robot Advisors (Best for new and small investors) This is the newest group of online investment brokers, which have only appeared about the last seven or eight years. But they do offer professional investment management at very low costs.

3. Family of Mutual Funds (Best for less active trading) A family of mutual funds are companies that manage their own group of mutual funds or ETFs. They can offer anywhere from a dozen to a few hundred funds, covering every market sector and possible market index. As each fund in the family effectively manages its own portfolio, it is an opportunity to have professional investment management.

4. Discount Brokers (Best for active traders) Discount brokers are in fact some of the largest online investment platforms available. Some of them are holding hundreds of billions of dollars for millions of individual investors. They provide you with the opportunity to invest in a wide range of assets, including stocks, bonds, mutual funds, exchange-traded funds (ETFs), foreign securities, real estate investment trusts, and futures and options.

Get an online broker

If you are ready to start investing but do not know where to start, then the best option is to use an online broker. Most of the online brokerage services offer very good services like online tax calculators, ETS, mutual funds, etc. You will find a lot of online brokers for beginners on the net.

If you cancel an order, please make sure that the cancellation is successful before making another transaction.

When you cancel an online trade, make sure that your initial transaction was not executed. Although you may receive an electronic receipt for cancellation, do not assume that the trade was cancelled. The order can only be canceled if it has not been executed. Check with your financial services company how you can confirm that the cancellation order was successful.

Remember timeframe:

You need to ask yourself a few questions like: when do you need the money back? Or, how long do you plan to hold on to the investment? According to most professionals, for short-term goals, the way you invest your money should be different. You must have a specific goal before jumping into investing somewhere. So, remember to set a timeframe before investing.

Research

When dealing with online investing, even though the actual trading process is faster than other methods, you still need to do extensive research. It's important to know what you're getting into due to the fact that it's a fast-moving market. You want to make sure that you are familiar with the changing ways of trading and use this knowledge to guard against the problems that investors typically face in the online market.

Be aware of Online Brokerage Minimums and Fees.

Whether you choose your own investments or use a robot-advisor, be aware that, not all brokerage services are equal, so be familiar with the "fees schedule" or "price" page of each online broker. Some brokers will charge you a commission per transaction, while others require you to pay a certain percentage of your account balance as a "management fee" (usually 0.25% to 1% of your account balance) monthly or annually. Also pay attention to the account minimum, which tells you how much cash you'll need to open an account in the first place (If you're opening a retirement account, most companies typically ignore this requirement).

Don't Turn Your Investment into Gaming

A self-invested person is someone who has the time to manage their investments, has a good understanding of the world of investing, as well as their own needs, and also has a tendency to take responsibility for managing their savings.

Many people are not suited to this type of investor, but still do the task of investing themselves. If you are one of these people, you are probably investing with much more risk than you should. In fact, even if you fit into the DIY investor model, you may still be taking more risk than you realize. This is why seeking investment advice is essential.

Safety Tips for Online Investment

If you're interested in investing and trading online, check out these investment security tips you need to know:

1. Try to get maximum information from the online brokers before choosing one of them to manage your investment.

2. Set a limit for your online trade transactions.

3. Always check your online transaction periodically.

4. Avoid trading online or investing in securities online using public computers.

5. Always make sure that the website on which you are trading online is secure and has a "locked padlock" icon in the browser window, and there should always be "https" at the beginning of the URL

Focus on Risk Management

Investments are made right if they are focused on risk management. This is a simple mathematical truth that is put into how money is combined to create wealth. A 20% loss only requires a 25% gain to return to balance, but a 50% loss requires an astonishing return. A 100% gain and a 90% loss require a huge 900% profit — just to get back into balance.

Be careful when you invest online.

If your investment is going to be hacked, it will most likely be on the web, not because of the statement you left in the recycling bin. So, change your password and username as often as possible, and don't let your computer remember your login information

Turn on two-factor authentication

Two-factor authentication is one of the best ways to protect your investment, and other financial accounts. With this security feature, you will need more than just a username and password to log into your account. You will also need a code that your financial institution will send you when you try to sign in. The code can be sent by text message, and it will usually expire in about ten minutes. Without this code, you will not be able to gain access to your account. It makes logging into an account a little more complicated, but adds another level of security.

Summary
These are tips that will help you as you begin investing your money online. If you're still feeling lost or unsure about how to grow your finances and investments, it's a good idea to get training or consultation from an investment expert.