The Facebook stock buying frenzy began on Friday May 18, 2012, the company’s initial public offering (IPO) stock
purchase price opened at $38 for the general public. Everyone is talking about buying Facebook stock with the hopes of riding the stock tidal wave of wealth. While buying a company’s stock can be a great asset class to have as part of your investment portfolio, many novice investors need to be cautious before joining the masses of online stock purchasers. If you are considering opening a stock account online to begin investing, here are 6 tips to consider before you make your first stock purchase.
- Understand Risk tolerance – an investor’s risk tolerance determines if an investor is a conservative, moderate or an aggressive investor. Knowing your risk tolerance is important before you make any type of investment purchase, conservative investors tend to be risk averse to stock buying, where as moderate and aggressive investors are risk seekers. Always check to see if the online broker’s website has a risk tolerance measuring questionnaire.
- Commission & Transaction fees – find out what are the transaction fees being charged to place a stock order. Many stock trading websites fees range from 4.95 to 9.95 the price can be based on the day of the week, the buying frequency or type of investment selection.
- Minimums – do the online broker require an upfront deposit to place an order, make sure minimums are not required to get started.
- Customer service – what type of interaction is available to answer your questions; are there live agents to take your calls, live chat sessions or only a FAQ page. Keep in mind customer service can only answer questions regarding the online trading plat form; many customer service agents that work for online brokers are not license professionals. This means they cannot give customers advice on their investments.
- Investment selection – what type of investments do the online broker provide for purchasing, it’s important to know is the website for only buying EFTs, stocks, mutual funds, or a variety of investments.
- Oversight affiliation –is the online servicer a member of SIPC®, which is the Securities Investor Protection Corporation or FINRA, Financial Industry Regulatory Authority. Online brokers usually include their affiliations within the footer of the website.
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