Today’s investor has a multitude of portfolio management tools to choose from. If you enjoy personally managing your portfolio, you may already be thinking about opening an account with an online brokerage firm. Perhaps you already have an online trading account you are working with. Even the most experienced traders can learn new ways to get the most out of their hands-on approach to portfolio management via emerging online tools. Learning five valuable tips will help you get the most out of your online trading account whether you are just starting to trade or you are a veteran online trader.
Choosing Your Online Brokerage Firm
Opening an account with the online brokerage firm of your choice is the first step toward managing your own portfolio. You have so many firms to choose from, so you want to choose wisely. You want to look for a firm that offers these features:
- Rewards for frequent trades. Whether you get low overall brokerage fees, free trades after a certain number of transactions or other perks, choose a firm that rewards you for keeping your account active.
- Easy online account access and management. If you find the firm’s Web portal easy to understand and navigate, you are more likely to trade frequently and get more benefits from your online account.
- Unlimited up-time. You want your firm to offer a stable web platform even during the busiest trading hours and days.
- Real-time investment reporting. Your online firm should deliver real-time investment reporting and updates so you can immediately react to changes or opportunities.
- Useful educational tools. You want to take advantage of the chance to learn more about trading and maximizing your portfolio. How well your account performs can partially depend on the quality of the research and education tools your brokerage firm provides.
- Mobile trading options. As long as you have a smartphone, the online firm you choose should offer you the option to download and install a mobile app so you can trade and manage your portfolio from anywhere.
- Customer service and trading options via phone. If for any reason you lose Internet access, you should still be able to reach your online brokerage firm via phone to get help and conduct share trading.
The 5 Tools
These five tools will help you get the most from your online brokerage account:
- Start small and learn investment basics first. If you are new to trading, you want to be sure you learn the fundamentals before you begin. For instance, there are different types of securities (stocks, bonds, CDs, mutual funds) you can choose to invest in. There are also different types of trade orders (market orders, limit orders, stop-loss orders) you can use to maximise your profits. Learning these basics will boost both your confidence and competence.
- Watch fees and administrative costs carefully. Managing your portfolio personally has its perks — often including lower brokerage and overhead fees. But these fees add up if you don’t watch them carefully.
- Identify your own trading style and risk-tolerance level. Some traders are very risk-tolerant, while others prefer a more cautious approach. It is best to err on the side of caution as a beginning trader until you learn the basics and are able to outline your long-term trading strategy and risk (or not) accordingly.
- Diversify. Diversification is the foremost defence you have against risky investments. Unless you are nearing retirement, you likely want to include a mixture of high-, mid- and low-risk investments in your overall portfolio.
- Don’t forget about taxes. Administrative overhead costs and brokerage fees aren’t the only costs that eat into your portfolio’s profits. Tax time can also impact your portfolio unless you stay aware of where potential tax cuts or rebates may exist. Some investment types offer tax breaks or tax-deferment benefits up front, including investment into superannuation funds.
By following these guidelines to get the most from your online brokerage firm, you can maximise your portfolio’s profitability as you plan your financial future.
About the Author: Wally Kershaw is an investment writer who contributes his expertise to several trading sites and magazines. He manages his portfolio online and enjoys teaching others what he knows about online investing.