In the old days, if you wanted to buy or sell stock, you needed a stockbroker. A man or a woman in a suite in a wood-paneled office with a mysterious connection to the stock exchanges, and who made it happen with the click of a few buttons or, way back when, with a phone call or wire.
In went your money, and five days later out came your stock certificate
And it cost you a chunk of money in the process.
Today all that has changed. Sure, there are still stockbrokers, and for the most part they still wear suits, only now they’re sitting in of cubicles instead of mahogany-lined suites straight out of Mad Men. But for the most part the landscape is completely difference, because the power of the internet has altered the face of investing forever.
Today, online stock trading companies rule the investment industry.
The advent of desktop computing has permeated the investing business perhaps like no other. Even live-and-in-person stockbrokers use a version of the same desktop investing systems available to individuals to execute trades and manage accounts, and they still charge a hefty fee (by comparison) for that service.
But now, investors can eliminate the middle entity (used to be called the middle man, but that’s no longer politically correct or accurate) by using an online broker.
Virtually anything a human stockbroker can do can be accomplished using an online service. Except, perhaps, the availability of an opinion from someone you know and trust, which will always be the province of a personal relationship.
With an online brokerage account you can buy and sell stocks and bonds, manage cash, receive statements and tax information, even conduct research and follow the real-time movements of the markets. All from your desktop.
And the best part is that it costs a small fraction, per trade, of the traditional brokerage commission. Some online brokers offer 2o to 100 free trades just for opening an account (the equivalent of from $500 to $5000 in commissions from a human stockbroker), and thereafter the commissions hover around $5 per trade.
The key words there are per trade.
Because unlike a traditional broker, who charges a fee based on the dollar amount involved of the trade, an online brokerage fee is fixed, no matter what the size of the transaction.
For example, if you buy 100 shares of a $10 stock, that $1000 trade will cost you only about $5. If you buy 1000 shares of a $50 stock, that $50,000 trade will still cost you only about $5.
Those economics alone making considering an online stock trading company worth considering.
If you’re confident in doing your own research and making your own investment decisions without having it affirmed or recommended by a stockbroker, and if you’re comfortable using a computer, than welcome to the new age of investing.
Because like every other aspect of managing our lives these days, it’s not only the wave of the future, it’s already the overwhelming choice of individual investors everywhere.
