How to Invest Online

Co-authored by wikiHow Staff

Last Updated: October 27, 2021 References

Buy, sell, buy, sell! You’ve probably seen images of stockbrokers scrambling around the chaotic trading floor of the stock exchange. But like so many other things these days, investing in the stock market online is much simpler, more convenient, and you don’t have to be the wolf of Wall Street to do it. With so many easy-to-use options, there’s really no reason you can’t get started today. To help you out, we’ve answered some of the most common questions that people have about how they can invest online.

Question 1

Question 1 of 10:
What are the 4 types of investments?

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Cash, fixed interest, property, and shares are the 4 main types. Cash investments include things like your bank account and savings account and generally have the lowest return. Fixed interest refers to “bond” investments, which is basically when a government takes out a loan that you invest in and will be repaid to you over time with a fixed interest rate. Property refers to buying houses and land and is considered a risky investment because the market can swiftly change. Investing in shares refers to buying stocks in a company on the stock market.^{[1]
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Question 2

Question 2 of 10:
Where can I invest online?

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Use an online stockbroker to buy and sell stocks. Buying and selling stocks is an investment that represents an ownership share in a company. As a company’s value increases, so does the value of its stock. You can also sell your stocks at any time to either reinvest the money or keep it for yourself. There are a bunch of different online stockbrokers, and using one is the easiest way to buy, sell, and monitor your stocks. Compare your options, choose an online stockbroker, and set up an account with them to get started investing!^{[2]
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- Many online stockbrokers also have apps you can download to your smartphone, tablet, or computer so you can buy and sell stock through it.

Question 3

Question 3 of 10:
What is the best online investment platform?

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If you’re casually investing, Fidelity and E-Trade may be the best for you. Fidelity offers $0 trades, quality industry research, and easy-to-use trading tools, including a mobile app. E-Trade was one of the first online brokers in the US and is the best platform for web-based trading. Both of these options are solid, value-driven choices that are great for everyday investors who may not have the time and energy to put hours into managing their investments each day.^{[3]
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- Fidelity and E-Trade may not offer some of the more in-depth analysis and trading platforms that more professional online brokerages offer.
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Interactive Brokers is the best for professional investors. Interactive Brokers offers traders access to global markets and some of the lowest margin rates. If you’re a professional who manages their investments daily (even constantly), Interactive Brokers is the best choice for day trading, mobile trading, as well as options and futures trading.^{[4]
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- You don’t have to be a pro to use Interactive Brokers, but it may not be the best platform for beginners who aren’t super familiar with managing their online investments.
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Use Charles Schwab for IRA accounts. An individual retirement account (IRA) allows you to invest online and save money for your retirement plan. In addition to offering quality brokerage services, Charles Schwab also provides industry-leading financial planning services, which can be really helpful as you save for retirement.^{[5]
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- Charles Schwab also offers a variety of investment services, including a mobile trading app.

Question 4

Question 4 of 10:
What is the best trading platform for beginners?

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TD Ameritrade may be the best platform for beginners. With $0 trades, easy-to-use trading platforms, great market research, and educational tools, TD Ameritrade is a great option if you’re new to investing online. They also have quality customer service, so if you’re having trouble with something, you can reach out for assistance.^{[6]
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Question 5

Question 5 of 10:
What is the easiest way to invest online?

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The easiest way is to let a robo-advisor invest your money for you. A robo-advisor is a computer program that automatically manages your investments. It works by asking you simple questions to figure out your financial goals and how much of a risk you’re willing to tolerate with your investments. Then, the robo-advisor uses algorithms to manage your investment portfolio based on your goals, as well as optimize it for tax purposes.^{[7]
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- Robo-advisors usually charge an annual fee of about 0.25% of your account balance.
- A few examples of robo-advisors you can use include Betterment, Wealthfront, Vanguard, and Stash.

Question 6

Question 6 of 10:
What should a beginner invest in?

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A 401(k) or a retirement plan at work should be the first place you invest. 401(k) is a type of pension account that’s backed by your employer. You can make payments into it out of your paycheck and they may be matched by your employer so you can start saving for retirement. Some companies have their own form of retirement investment plan that’s different than a 401(k), but investing in your retirement is never a bad place to start as an investor.^{[8]
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- When you invest in a 401(k), the money goes directly into the account without ever going into your bank account.

Question 7

Question 7 of 10:
How do I make money from stocks?

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Allow your stocks to increase in value and collect dividends. It can be tempting to try to sell all of your stocks as soon as they start to increase (or decrease) in value to earn a quick buck. But the more you invest in a company, the more likely you’ll be able to collect dividends, which are payments a company makes to shareholders from their profit. If you constantly buy and sell stocks, you won’t earn any dividends because you won’t have enough stock in a single company.^{[9]
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- Not all companies offer dividends, so be sure to invest in ones that do if you’re looking for a consistent revenue stream from your stocks.
- Typically, more established companies are likely to pay dividends since they have more money and often turn larger profits than newer and start-up companies.^{[10]
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Sell your stocks if you want to make a profit. If you buy a stock for $5 and in a couple of months it’s worth $20, you can sell that stock to earn a $15 profit. Buying and selling stock for a profit can earn you a lot of money, but there’s also more risk. If the stock you invest in fails to increase in value, you could be stuck with a loss. You can also sell your stock if you think a company isn’t performing well or if you simply need the money for something such as buying a home.^{[11]
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- You can do whatever you like with your stock. If you want to sell it to invest the money elsewhere, that’s totally fine, too!

Question 8

Question 8 of 10:
Can I get rich by trading?

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Yes, but investing can also be risky. An online investment account allows you to access the biggest money-making machine in the world. You can invest online to slowly save up some money or you can invest more aggressively and potentially grow your wealth quickly. Plenty of people have become millionaires from just online investing alone. However, you can invest your money in a company that fails or goes under and lose your investment, so there is a risk involved.^{[12]
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- You can also minimize your risk by investing in established companies, which may not come with as high of a return, but you’ll be less likely to lose any money. For instance, if you invest in Apple, you may not make millions overnight, but you likely won’t see the value of your investment decrease.
- Investing in startup companies can come with a risk, but there’s also a chance for a major reward. For example, if the company goes under, you could lose your investment, but if you bought major shares and the company turns into a multi-billion dollar corporation, you may see a major return!
- If you invest $10 a week, after 1 year, you’ll have $541. After 5 years, you’ll have $3,173, and after 10 years, you’ll have $7,836!

Question 9

Question 9 of 10:
How can I start saving money to invest?

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Try the cookie jar approach and save $10 a week. You don’t need to have a ton of money to invest online, but it does help to have some savings that you can use to buy stocks. One of the most effective ways to save up some extra money is to set aside a little bit each week. Put $10 into an envelope, a small safe, or even a shoebox. You can also transfer a little bit of money into an online savings account so you can use it to invest.^{[13]
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- If you set aside $10 a week, in 3 months, you’ll have $120 you can use to invest!
- If you’re setting aside cash, you’ll need to deposit it into a bank account so you can use it to buy stocks and invest online.

Question 10

Question 10 of 10:
Can I start investing with $100?

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Yes, you can get started with as little as $1 USD! In fact, starting small and investing with just a little bit of money is a great way to learn about investing without major risk. Choose an online brokerage that doesn’t charge trade commissions and doesn’t require a minimum balance or purchase. Set up an account and start investing your money.^{[14]
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- In the past, stockbrokers would charge commissions that made it difficult for people to get started investing. But these days, many online brokerages don’t charge any trading commissions.

Warnings

Watch out for suspicious companies and never give out your personal or financial information online unless you know for sure who you’re giving it to.

Thanks!
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