How to Invest Money Over the Internet

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The Internet has given investors unprecedented access to investment opportunities. It has also exposed them to an unprecedented number of scams and rip-offs. The Internet is both opportunity and financial pitfall. It can help make you rich or broke. If you are going to invest your money over the Internet, there are some very important things you must consider.

  • Decide what kind of investment you want. Most online investors put their money in certificates of deposit, money market accounts, mutual funds or individual stocks. These can be purchased through online banks, mutual fund companies and online brokers.

  • Do your banking over the Internet. Online banks often offer better interest rates on certificates of deposit and money market accounts. Most "brick and mortar" banks have online banking sites. They sometimes offer incentives to bank online since it lowers their expenses. If the bank is in solid financial shape overall, then their online banking should also be dependable. There are also strictly online banks. Research these more carefully before investing with them. If you have a problem, there is no branch you can go to and complain.

  • Seek out a well-known mutual fund company. The most popular ones are no-load. That means they don't charge you a fee to buy or sell their products. No-load mutual fund companies include Fidelity, Vanguard and T. Rowe Price. All of them sell a wide variety of mutual funds and will advise you on which may be best for you. They fully disclose which mutual funds are higher- and lower-risk investments. You can view all their products online at their websites.

  • Find an online broker if you want to buy individual stocks over the Internet. Choose an online broker like E*Trade or TDAmeritrade if you are an independent investor. Those companies provide plenty of data on stocks. It is up to you to read the data and decide how to invest your money. Fees tend to be low since just about everything is automated. Don't expect to deal with real people very often. Check out online broker ratings on websites like Bargaineering, The Ne tFool and SmartMoney. They evaluate online brokers by features, fees and customer satisfaction. They will help you find an online broker that is a good fit for you.

  • Locate a virtual stock exchange if you want to practice stock trading over the Internet. These are fantasy stock trading games that you play online. They use real gains and losses from real stocks. Only the money is make believe. VSE.marketwatch is a division of the "Wall Street Journal." The InvestingExperience website offers a game geared toward people who want practice as day traders. Others include WallStreetSurvivor, StockTrak and Simulator.Investopedia.

Tips & Warnings

  • Be very, very suspicious of anyone who contacts you with investment opportunities on the Internet. Most reputable online investment companies do not solicit investors. Research all investments thoroughly before sending them your money. Also realize that there is risk with any investment. You could end up losing money. Choose your investments wisely.

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