Investing can take on many forms for the individual. By definition, anything that has potential to produce a return is classified as an investment and the resulting returns can vary widely. On one end, there are safe investments such as savings accounts and on the other end, there are equity investments such as stocks, derivatives, and other riskier investments.
With interest rates at record lows, it isn’t surprising that so many investors are looking for better returns and stock trading is one area where improved returns are possible. Common stock is traded each day of the week on organized exchanges such as the New York Stock Exchange, NASDAQ, and numerous other exchanges around the world. These exchanges provide a marketplace where buyers and sellers are brought together, helping to more efficiently facilitate the trading of stock and other investment securities.
Purchasing common stock used to involve calling a stock broker and placing an order with a representative but today, the process is much simpler. Online brokerage accounts can be opened quickly and once they are funded, an investor can begin trading shares of stock or other investments from the comfort of home. Through online trading, investors can purchase or sell shares quickly without the need for a human intermediary. Online brokerage accounts are not only easier to use, they are also less expensive. Most internet brokers offer their customers a means to buy or sell shares for a per- transaction cost of less than $15- an amount that is actually lower than the rates from decades ago. Online accounts generally require investors to conduct their own research and make their own financial decisions, but the fees are very low and quite attractive to the educated investor who would rather make his/her own investment decision. Online brokerage companies still offer full service trades and investment advice, but these types of accounts often charge several times more per transaction and are recommended only for the novice investor in need of financial guidance.
Stock trading is gaining in popularity and today, a large percentage of individuals in the United States partake in the often fast- paced action of stock market investing. Regulatory agencies exist, but there is potential risk with stock investments and individuals should make sure they know what they are doing and conduct necessary research before placing a trade. But once the homework is complete, better investment returns could be just around the corner. There are no guarantees, but stock market trading has historically outperformed fixed income investments and it could prove to be just the right investment to jump- start and otherwise sluggish portfolio.
Copyright 2011, Bryan Carey