how to buy stocks online

I have stock accounts at 3 different brokers (E*Trade, Ameriprise Financial, and Merrill Lynch) and I must say that my favorite by far is E*Trade. Why do I have three different accounts? My Merrill Lynch account was set up for me in the 80′s by my father, I set up my own account at Ameriprise in the early 90′s, and my E*Trade account was set up as my first online account about 8 years ago.

At the time I put my first dollars in E*Trade, they were one of the pioneers of online brokers and I felt they probably knew what they were doing more than anyone else. The online investing world was relatively new and I wanted to go with one of the leaders. They still are a leader today and I have never regretted it.

Price

I get all my stock trades for $9.99 and while I can get cheaper trades elsewhere, it is just not worth it to me to change because I don’t trade too often. Their price has always been $9.99 as long as I can remember and I get good value for that because I LOVE their website and how easy it is to navigate.

Website Usability

When you are choosing between E*Trade and other online brokers, you will find that one of the biggest differences between all of them is their platform website. For instance, I absolutely hate my Ameriprise account because their website is NOT user friendly. I can never figure out how to get from one place to another and I don’t like the way they display things. It’s like Ameriprise hasn’t thought about how best to present the account information and they have never changed anything to make it better.

E*Trade on the other hand, is a dream to navigate and it takes very little time to figure out where everything is. When you first log on, it will have your account(s) displayed right in front of you and all you have to do is click on them to take you to a screen that will show you every stock in your portfolio. You will immediately see how much each of your stocks went up or down for the day along with some other basic information. Everything about their website is simple and “user friendly” which is just the way it should be.

Real Offices In Many Cities

Another thing I like about E*Trade is that they are big enough (publicly traded on Nasdaq – symbol ETFC) to have real offices in many major cities. Unlike some of the discount brokers that only have websites, they have a brick and mortar office in my city and I went there a couple of times when I wanted to add money to my account. I was able to hand a check directly to a broker and talk to him as well.

You can of course add money to your account by mail or by wire but I like the fact that I have somewhere to go if I have any real problem or complaints. I have also dealt with them on the phone from time to time regarding account issues and always found their customer service to be great. They even have online customer service chat so you always know someone is there 24/7.

Research, Investing, and Trading Tools

Once you open an account you will have access to a full array of research tools that rival that of any online broker. I don’t personally use them too often but you probably will find all you need. Every stock you look up will have a section for analyst research, fundamentals, earnings (complete with graphs) and a section listing insider activity.

With E*Trade you also get a section that has about 25 videos covering different online investment topics. There are also periodic live web seminars that you have to sign up for that do NOT cost anything extra.

If you think you will want to be buying stocks on any of your mobile devices there are apps for the iPad, iPhone, Android, and Blackberry that allow you to trade on the go.

Bottom Line

E*Trade is one of the original online discount brokers that started the whole website stock trading revolution. In my opinion they have the most solid website experience and that is extremely important for me as I do log on to my account just about every day to see how my stocks fared. I feel confident having my money with them because of the responsive customer service I have always gotten and their price is right in line with most everyone else. Right now E*Trade is offering free trades for the first 60 days if you are a new customer so it is a good time to give them a try!

I just spent a week with my dad who is 86 years old. Every time I see him I waste hours of my life showing him my iPad and laptop and trying to explain what the Internet is and how it works. For some inexplicable reason, the online world is something he just can’t wrap his head around.

Just when I think he is about to get it, he asks a question that shows he still has no clue. It happens every time and I know he will die before he understands what the Internet is all about. I just have to accept it.

No Internet But He Still Makes Money In Stocks

Interestingly though, my dad has made quite a bit of money in the stock market in his life (I’m talking $1,000,000+) and while a lot of that was before the Internet, some of that has definitely been in the last ten years. He continues to actively monitor his portfolio and make all buying and selling decisions himself WITHOUT any access to the Internet.

My father has accounts at a couple of full service brokers (Merrill Lynch and Raymond James) and I guess he does get some recommendations from them. But he doesn’t use an online broker and he doesn’t know how to access his account online. He doesn’t even know how to check stock prices online if he were to ever figure out how to get online.

For him, the whole Internet world doesn’t exist.

And yet he continues to make money in the stock market!

What Does This Really Mean?

To me this shows that all the bells and whistles that are available today with the online discount brokers aren’t as important as they would want you to believe. All the charts, tools, apps, real time quotes, and other things that come with an online account aren’t worth anything if you don’t pick good stocks in the first place.

You might say that all those “extras” you get with an online account may help a person learn how to pick winning stocks. That may be true and access to information is inarguably a good thing. But I really doubt the average stock investor learns the discipline from those tools that my dad has used for over 50 years to consistently make money in the stock market.

I would argue that all those comprehensive charts, the ability to screen stocks, and everything else you can do now days in your online broker account makes a person want to trade MORE OFTEN. Remember, those online brokers make money when you trade and getting you to trade is important to them. They would rather have you do more of it than less of it.

Buying Stocks For Long Term Gains

My dad doesn’t trade stocks. He invests in them and that means in most cases, he holds them for longer than a year. He doesn’t go after the quick hits that are so tempting with a cheap online account. Just twenty bucks for a round trip trade means you can gamble on any stock you want in today’s world of online investing and not worry about trading fees. Don’t get me wrong, its great that buying and selling stocks is now so cheap but sometimes I fear that is a bad thing.

I sometimes take shots at stocks I shouldn’t, hoping for a quick short term gain and knowing that it won’t cost very much in trading fees. But 9 times out of 10, those “shots” I take end up being losers. I don’t have the discipline he has and I often pay dearly for it.

To make money in stocks you need to pick winners more often than losers and you need to have DISCIPLINE. You can’t be all over the board buying this and selling that and making those decisions on the fly. You need to go about things slowly and methodically and stick to a plan.

For my dad, that plan has been to buy only those stocks that he thinks will do well over a longer time frame. That way, he pays less in taxes (long term gains are taxed at less than short term gains) and he saves on trading costs. He puts more time into his decisions than I might and he is more committed to sticking with them. Will this work for everyone? I don’t know but it has sure worked for my him.