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Online Trading

Online Trading, Money & FinanceFor any investor trading in stocks is a hassle free affair and in fact one of the most convenient way to earn money. Unlike in the past when trading was not as transparent as today and one needed to depend on the sub broker a lot for trading , lots of information and technical assistance is available for any serious investor. Today technology enables a person to completely plan his investing needs in the comfort of his home and at the time he likes, all at the click of the mouse.

All one needs is a computer, net connection and a subscription to a 3-in-1 online investing account with any of such service providers. The online mode of investing largely eliminates all the major hassles of investing: It provides a wealth of information, analysis and tools that enable you to take more informed decisions, virtually no paperwork involved as all transaction records are online and statements available in digital form, invest anytime and from anywhere at your time and convenience (yes, even at night)!

Getting started

To begin investing online one needs to register as a member for an integrated 3-in-1 online trading account with any of the service providers.

The three accounts are:

  • Trading account, which enables you to transact online.
  • An Internet enabled bank account for online money transfers through Internet.
  • A demat account, where your shares will be deposited.

When Choosing An Online Trading Account

Selection, the most important part of Online trading, Money and FinanceCredibility and credentials: The backing of a reputed bank or financial institution, which provides that additional safety.
Which investments can you make online: Are you allowed to invest in equity shares, mutual funds and IPOs fully through the online route or in only one of them?
Quality of information and content: Ensure you are getting the best of information, research support and tools, which is provided to you in an easy and reader friendly manner.
Speed of order execution: Are you able to place your equity orders and receive quick order confirmations during peak hours?
Are you getting a choice of products to choose from: Some service providers provide a choice of products - from the basic (classic) account to more advanced (trading platforms with live and streaming market information on equity markets).
Safety: Check for the security features inbuilt into the system.
Customer care: Does the service provider have a dedicated customer care cell to take care of your queries and problems?
▪ Besides the above, many additional features offered may be looked into, like ability to sell shares next day before receiving delivery, SMS alerts, intra day trading in equities, etc based on your investing needs.

Saving Versus Investing

Saving or Investing, Money and FinanceSaving and investing are two unique concepts, and it's important to understand the difference between them and the need for each. Saving, involves the protection and preservation of money from loss. Investing, on the other hand, refers to make a long-term commitment of putting money away and letting it grow. This involves risk, such as the occasional and inevitable downturns in the market; however, over the long-term (five years or more) those dips are expected to smooth out into an overall upward growth pattern.

In order to achieve the best possible results, it's crucial that you match your saving or investing goals with the proper financial tools. For instance, stocks and stock mutual funds are generally considered to be excellent long-term investment options. For the majority of the last century, stocks have produced some of the best returns when compared to virtually every other investment available. But over a short time frame (under five years), they can be quite volatile and dangerous to an ill-prepared portfolio because stocks – and the stock market in general – have historically experienced short-term drops in value. Lets make it more clear with an example. Let’s suppose that a person has commitment in his personal front as his kids will enter college in an year or so; these are short term needs and for other commitments like these, one need to preserve capital. This comes from Saving.Investing on the other hand attempts to make money grow by allowing it to compound with the assumption a certain risk level, saving acts to protect your investment capital so that it's both intact and accessible when it's needed.

Although assuming a high level of risk for a short investing horizon is not the way to go, neither is simply storing your cash in a non-interest-bearing checking or extremely low-paying savings account. The goal is to find a way to ensure that your money is safe from risk and readily available for near-term use while at the same time positioned to offset the eroding effects of inflation. It's important, therefore, to select a savings option that accomplishes both of these objectives and is also easy to set up and manage.

When deciding where to put your money for relatively short periods of time, you must carefully weigh several factors related to short-term savings. These will give you a good indication of which savings option is best suited for you. Some things to consider include: the amount of money that you're going to put into your savings account; the amount of time that you have before the funds are needed; and how important to you convenience of the funds is.

There are a number of different options to explore, each with its own benefits and drawbacks. Four major types of savings vehicles to explore include savings accounts, certificates of deposit (CDs), money market accounts, and certain bond mutual funds. But shop around diligently; interest rates can vary significantly among providers of these instruments. Stockbrokers, for example, have access to nationwide information on CDs and money market funds, and are good sources for high rates of return on these items.

 

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