Stocks

How to Invest Money Online Starting Today

By Eko Y

Investing your extra money is far better than putting it into a bank account, which earns such little interest these days. It is naturally wise to keep some money in the bank because it is instantly accessible in case of an emergency, but for amounts that might be deemed in excess of such potential emergencies, you may want to consider making an investment online, using the power and flexibility of the Internet. How do you go about selecting the best and safest way to invest using online resources?

Investing usually involves purchase and later sale of stocks, bonds or commodities. There are many opportunities available and it is easy to become overwhelmed by the endless number of choices that you might be enticed to make. Let's look first at stocks, one of the first things people think of when imagining the process of generating wealth.

Small investors can avoid broker fees by using Dividend Reinvestment Plans (DRPs), which are also called Drips. A similar type of program is the Direct Stock Purchase Plans (DSPs). These let you bypass brokers and their commissions by letting you buy the stocks directly from the company or the company's agent. Brokers usually force investors to buy large lots in hundreds of shares, but for a small investor, this can be prohibitive. Drips allow you to buy in small lots, even down to one share at a time. Stock prices are volatile, and can jump around, so there is some risk.

Bonds tend to be more stable in value, and can bring in greater returns than stocks on average. But in some cases, the risks are greater. A safe type of bond is the Treasury Bond because these are backed by the government, but their yield is also lower. Corporate Bonds represent a better chance at obtaining a good yield, but also represent greater risk. Be sure to check a firm's credit rating with Standard & Poor's, Moody's Investors Service and Fitch Ratings. Avoid ratings that are below BBB unless you enjoy taking risks. Municipal bonds are another form of bond, with lower yields and lower risks. They are most advantageous to large investors because of their tax-free status. A beginning investor should research these different bond forms to get a better feeling of risks, benefits, yields and so on to select the best one for their needs.

Commodity trading requires more research, and is not generally recommended for beginners who are interested in starting investing today with a smaller amount and with little experience.

Anyone interested in investing today will want to know how to invest money online. Be sure to research wisely before jumping into this potentially profitable endeavor.