Online investing for beginners: How to get started
Whether you want to manage everything yourself, want some advice, or want an expert to manage your investments for you, there are options available. But with so many choices, where do you start?
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Online investing for beginners: How to get started
These days, just about everything can be done online — you can book travel, order groceries and set up an investment portfolio.
Online investing is a great way to do more with your money, investing is a good way to make your money work for you and there are online options out there to suit every type of investor. Whether you want to manage everything yourself, want some advice, or want an expert to manage your investments for you, there are options available. But with so many choices, where do you start? Below we describe the ins and outs of online investing – so you'll have the basics down pat before you make your first trade.
First things first: What is online investing?
The term “Online investing” originally referred to trading stocks and other investments on your own, online, without any interaction with a financial professional. This was often called e-trading, self-directed investing, direct investing, or using a discount brokerage since the fees to trade by yourself were lower than the fees of a traditional full service brokerage. This term has expanded over the years to include a variety of services and today you can find many options to suit your needs.
Self-Directed Investing: When you sign up with an online investing platform, you'll have access to a web portal that typically includes tools and resources to help you execute trades on your own and manage your portfolio.
Portfolio Management Services: There's also a growing category of online investment management or automated online investing services (sometimes called "robo" services). These options match you to a portfolio based on a questionnaire on your investment objectives and risk tolerance, and then the portfolio management is handled by a professional without you ever needing to meet or talk to them (hence the "robo").
What are the benefits of online investing?
Lower Fees: Because it requires significantly less oversight and interaction with professionals, online investing is typically less expensive than traditional investing. Many trades are subject to flat fees and any management fees that apply are typically lower because online investment technology makes things more efficient and as a result, less expensive.
Convenience: E-traders also love online investing because of the convenience. It can be done anywhere, any time, from any device.
Control: There's also the opportunity for greater control than you'd have with traditional investments held with portfolio managers. Some online investment services will even let you decide how much control you want and how much you'd rather turn over to a professional (or computer).
What are the potential drawbacks?
While there are huge benefits to online investing, there are other considerations that you need to take into account before jumping into e-trading — primarily, becoming knowledgeable enough to feel confident in your decisions.
It does take effort to learn the basic principles of investing. You'll need to feel comfortable with different investment strategies, unearthing good investments for yourself and aligning those investments with your goals.
The "robo" investment option relieves you of much of this knowledge burden, but you'll still need to be knowledgeable enough to know your goals, your risk tolerance, your desired returns, your time horizon, etc. and then monitor your investments over time.
How to start investing online
When you're ready to begin investing online, the first thing you need to do is decide how much control you want in the investment process.
Once you have a feel for that, your next step is to research different services and see which ones have the features you like the most.
The other thing you need to keep in mind is what your investing fees will be and how active you plan to be on the platform. You may find that you're paying more than you expected if you start trading frequently and making numerous short-term trades.
Ready to start investing online? Here's what to do next.
Now that you know how to start investing in stocks online, your next step is to look at the available tools and platforms. Here are a couple of options:
BMO Investorline Self-Directed is an online trading platform that offers tools and resources for education, planning and online stock trading itself. It has everything you need to plan and manage your investments with confidence.
BMO InvestorLine adviceDirect is another online trading platform that provides specific investment advice and continuous portfolio monitoring. It also gives you support from investment specialists who can provide guidance and information when you need it.
BMO SmartFolio is an online investing service that matches you with a portfolio of ETFs based on your responses to a questionnaire, and a team of experts manage your investments for you.
Ready to start investing?
Start investing online with BMO InvestorLine Self-Directed.
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BMO InvestorLine is a member of BMO Financial Group. ®Registered trade-mark of Bank of Montreal, used under licence. BMO InvestorLine Inc. is a wholly owned subsidiary of Bank of Montreal Holding Inc.
An adviceDirect account is a non-discretionary, fee based account which offers investment recommendations. adviceDirect does not provide portfolio management by a portfolio manager. The client makes their own investment decisions and manages their own investment portfolio. adviceDirect does not offer discretionary, managed accounts.
BMO SmartFolio is a product of BMO Nesbitt Burns. “Nesbitt Burns” and “SmartFolio” are trademarks of BMO Nesbitt Burns Inc. BMO Nesbitt Burns Inc. is a wholly owned subsidiary of Bank of Montreal.