Is it a good idea to invest my money in online trading?

posted 3 months ago in Finances
Post # 2
Member
394 posts
Helper bee

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lessa :  my fiance is a CFP and does a bunch of stuff in finance. 

If your goal is to build wealth, his advice would be to have 6 months saving AND pay off all debt including student loans (except mortgage) first. If you don’t have those things in that order, don’t even think about investing.

If you do have those things in order, then there are ETFs and mutual funds via companies like Vanguard you could look into, but he HIGHLY suggests getting a financial planner if you have no idea how to do anything. You will lose money fast if you don’t know what you are doing. Online high stakes trading the way they do it on Wall St. is not for beginners. How much you earn is based on the risk and how much you put in.

You probably could do with a retirement fund like 401k or Roth IRA, also. 

Btw if I sound insulting it’s literally because I really was just that dumb with money and I’m explaining like you’re 5.

 

Okay, free advice ends there. Lol. Basically get yourself a CFP who abides by his/her “fiduciary responsibility.” 

Post # 3
Member
2608 posts
Sugar bee

What specifically do you mean by “online trading”? 

I’m not sure if you’re talking about a normal brokerage account with an online platform that enables easy trades (e.g. Vanguard, Schwab, Fidelity) or something different. If that’s what you mean, yes, I have money in an online brokerage account, invested in ETFs (a mix of domestic and foreign stock funds as well as bond funds and treasuries).

The amount you’ll make varies by how well the market is doing, of course, but if you invest in index funds it is a pretty safe bet your money will grow as long as you’re willing to leave it there and ride out the lulls. Based on historical averages after inflation, you’ll make ~7% a year if you invest in a total US stock market fund. 

ETA: I would not buy individual stocks online, or anywhere. Stock pickers can’t reliably beat index funds, so it’s not worth it IMO. If you want advice on index funds, check out the Bogleheads forum. You can also sign up for a free service like Personal Capital that will give you a target recommended allocation so you know what rough percentage should be in US vs. foreign stocks, etc. And will check on your overall financial picture and help you prioritize goals. 

Post # 4
Member
832 posts
Busy bee
  • Wedding: December 1969

I’ve been investing since I was 19.  Started with mutual funds investing just $50 a month.  Now I still invest in mutual funds, 401K and stocks in companies I believe will do well. I don’t believe in paying off all debt before investing. If you’re young investing early is the way to go.  If you invest x amount a year from the time you’re 20 until you’re 30 you’ll have XXX amount when you retire.  If you invest x amount a year from 30 to 60 you’ll have about half that.  Invest!

Post # 5
Member
2231 posts
Buzzing bee
  • Wedding: April 2018

Check out the website Investment Day trading and you can trade with monopoly money until you feel confident using your own. Good way to practice. 

Post # 6
Member
8747 posts
Bumble Beekeeper

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lessa :  I use an online Fidelity account for all of my investing outside my 401k which includes a rollover IRA, taxable brokerage account, and a 529 for my daughter. I keep it simple and only invest in index funds. On the taxable account I’ve averaged about 7.5% return over the last 4 years since I opened the account. The 529 is a little less, the rollover IRA is a little more which is on account of the age of the accounts and the mix of index funds within each account (we have different risk tolerances for each account so they aren’t the same). 

I believe in opening a retirement account as soon as you’re eligible for one and contributing something (and at least enough to get any company match) from the get go regardless of your other debts. I put away 6% (to get a 6% match) from day 1 of my first job and I never missed the money even though my salary was straight up pitiful. I didn’t start investing in a taxable account until my debts (except mortgage) were paid off and I had a healthy emergency fund. If you’d have to charge a car repair then you shouldn’t be playing in the market yet. It’s basically fancy gambling – don’t put in what you can’t afford to lose. 

Post # 7
Member
940 posts
Busy bee

Investing in “online trading” isn’t a thing. Do you mean like day trading or something?

At this point, the only way to buy stocks, bonds, mutual funds, ETFs, etc, is to purchase them online, usually through a brokerage like Schwab or Fidelity, so if you want to hold traditional investments, that’s how that works. 

I have all of my personal accounts with Schwab as when I worked in wealth management, that was the better of the brokerages we partnered with, but the big three are all about the same. I have a taxable brokerage, an IRA, a SEP IRA, and then a 401k and an ESPP account through my employer. I’d suggest doing some research on investment strategy before starting to buy things at random. There’s a lot of good advice on the basics out there that won’t require hiring a pro, especially if you don’t have significant assets. 

Post # 9
Member
4585 posts
Honey bee
  • Wedding: September 2012

I have investments in the form of my 403b (through work) and an IRA and a joint WROS (through Fidelity). I don’t have the time or knowledge to individually manage individual stocks or such… wouldn’t even know where to start.

With the current market, they’re all growing, but I don’t see that as a form of income (except when it comes to taxes, of course) – they’re literally an investment in my future, not current money for me to use.

My mother is financially savvy and my brother is in finance and they both seem to think I’m going about it the right way, fwiw.

Post # 10
Member
924 posts
Busy bee

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lessa :  What do you mean by “online trading?” 

Post # 11
Member
40 posts
Newbee
  • Wedding: September 2018

I agree with other replies, in which type of online trading are you interested? There are many types of them and it’s really necessary to get enough knowledge about them before the start.
In general the online trading can be a good idea for making at least some additional money regularly. It has many advantages like accessibility (everybody can join the online market), liquidity, low fees (it’s the same for trade-related commissions too), providing more trading opportunities because of flexible schedule and ability to use different online tools.
But it’s not easy to become a successful trader. Its types seem very easy but you need to have good knowledge about the certain type https://www.latinpost.com/articles/142690/20191123/tips-for-the-perfect-day-trading-strategy , get enough experience in it for making profitable investments and always be careful with possible scam (it’s very widespread among brokers for example).

Post # 12
Member
1002 posts
Bumble bee
  • Wedding: June 2019 - City, State

My Brother-In-Law did day trading for a while. He lost $10,000 in his first weeks, and continued to lose more in the following months. It’s not a good hobby for an amateur.

I recommend a 401k or mutual funds. I have both. 

Post # 13
Member
2231 posts
Buzzing bee
  • Wedding: April 2018

Day trading is a huge amount of work and you need to keep a very close eye on trends & what’s going on in the world. Look at the S&P 500 companies etc.

You can make a lot of money from day trading but you have to know what you’re doing. Study charts etc.

Post # 14
Member
728 posts
Busy bee
  • Wedding: September 2018

When I paid off my mortgage I tried trading shares for fun for a while. I made $1500 really quickly which sucked me in, but then the company had bad news and I lost 90% of all my money (5 figures). 

They have recovered n the last two years, but I am still only just back to breaking even. It would have been a disaster if I needed that money sooner. 

Personally I’d either put money in a pension or tracker fund and go for the long term view. I would not touch individual shares or day trading with a barge pole unless it’s money you can afford to lose. It’s not really better than gambling imo. 

Post # 15
Member
3520 posts
Sugar bee
  • Wedding: June 2016

View original reply
lessa :  If you’re talking about day trading – no. 

If you mean long-term investing in the stock market – yes, that is absolutely the way to go. 

The Investing for Beginners podcast might be really helpful to you. 

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