What You Need to Get Started Investing Online

Dann Albright 24-06-2016

When you’re trying to create a solid financial future, investing is a great way to go; the generally expected return of a long-term investment in the stock market is 6–7%, which can add up to a lot of money over the course of a few decades. It’s a sound financial decision Use These Resources to Make the Biggest Financial Decisions of Your 20s If you're in your twenties, don't make the same financial mistakes that all old people regret. Follow our advice and use tech to make the biggest financial decisions of your twenties. Read More for most people looking to build wealth.


And the internet has opened up a lot of great investment opportunities that can help you decide what to invest in, make trades for you, and keep track of your invested funds. But you need to know how to get started. If you can say you’ve checked off these six items from your list, you’re ready to start investing online.

Become Financially Stable

This is a crucial step; it’s easy to want to start building your wealth through investing before you’ve established a solid emergency fund or have started paying down your debts How to Visualize Your Debt & Stay Motivated While Paying It Off It's tough to stay motivated to keep paying off your debt, but visualizing it can make the process easier. Read More . But ensuring your financial stability first means you’ll be able to keep your money in the market for longer, your financial condition won’t suffer when you start moving your money around, and you’ll have more disposable income to invest.


Exactly what “financially stable” means is different for every person, but Good Financial Cents has a great list of 27 signs that you’re financially stable, which includes never overdrawing your checking account, paying your bills on time, having a stable job, and contributing a double-digit percentage of your income to retirement.

One of the biggest steps in becoming financially stable is not having a crazy amount of debt. If you haven’t read “How to Get Rich: The Fastest Way Out of Debt How to Get Rich: The Fastest Way to Get Out of Debt Imagine being debt free. No overdrawn balances or unpaid bills. There is a foolproof way of getting yourself out of debt. It starts with a plan and some discipline. Let's visit the other ingredients. Read More ,” do yourself a favor and read it now. It just might change how you think about your finances.


Have an Emergency Fund

This is part of being financially stable, but it’s so important that it warrants an entry of its own. Would you be able to handle an emergency if something came up? What would you do if you lost your job, or if your car broke down? Do you have enough cash to cover these kinds of situations? If not, you’ll need to start saving How To Start Saving Money And Stop Spending With 4 Easy Habits One of the top new year resolutions on many people's lists is to spend less and save more. It's easier said than done, but you can still rely on several apps and tools to help... Read More , and fast.

How much you need to have in an emergency fund depends largely on your situation; if your life is fairly stable, three months’ worth of expenses should do it. If you’re a freelancer, you’re going through a number of life changes, or you don’t feel particularly stable, aiming for six months’ is a better idea.


If that sounds like a lot of money, that’s because it is. Establishing a solid emergency fund isn’t easy, but it’s definitely worth the time it takes to cut down your expenses and put more cash aside.


Have a Good Handle on Where Your Money Is at All Times

This means budgeting, and a lot of it. You need to know where your money is and where it’s going all the time. Budgeting gets easier with practice, but it can be difficult at first, so you’ll need to take small steps 7 Baby Steps to Finally Start Saving and Budgeting Your Money with EveryDollar EveryDollar is made by personal finance guru Dave Ramsey. We look at how it can help get your finances on the right track. Read More . It’s a good first step in creating good money habits How to Fix Bad Financial Habits With a 30-Day Money Challenge Read More , which are also essential for effective investing. If you don’t know where all of your money is, it’s going to be hard to make good investment decisions.

Using an automated budgeting app like Mint or You Need a Budge The Online Budget Battle: Mint vs. You Need a Budget (YNAB) When it comes to online budgeting and expense tracking, there are plenty of solutions, but two of the biggest names in the business are Mint and You Need a Budget (YNAB). Read More t is the way to go here, especially if you want quick access to your financial information wherever you are. You can also use a homemade Excel spreadsheet Make a Personal Budget With Microsoft Excel in 4 Easy Steps Do you have so much debt that it will take decades to pay off? Make a budget and use these Excel tips to pay off your debt sooner. Read More to budget if you want to get really detailed, or download a budget template 7 Useful Excel Sheets to Instantly Improve Your Family's Budget It's not always easy to set up a family budget, but these seven templates will give you the structure you need to get started. Read More to get started quickly.

Choose an Investing Solution

There are a lot of different ways to invest online, and they each have their own advantages; you’ll have to compare them and decide which is right for you. On the simpler side, you have automated investing solutions The 5 Best Investment Apps for First-Time Beginners Want to start investing? Have no idea where to begin? Here are the best stock and investment apps for beginners. Read More like Clink and Betterment, which take a certain amount of money from your accounts and invest it on a regular basis (I have a weekly debit from my bank account set up with Clink, for example). You don’t get a whole lot of control, but you also don’t have to do much of anything to start building up your investment portfolio.

There are also a number of online brokerages How to Buy Stocks Online Faster, Cheaper, and From Anywhere It's easy to invest in stocks without a broker and save yourself a lot of money in the process. We show you how with four top tips. Read More that will let you take full control over your own stock portfolio, like eTrade and TD Ameritrade. These tend to have pretty low fees, but you don’t get the one-on-one attention, like you would with a traditional brokerage like Fidelity or Vanguard. These investing houses have their own advantages, but you’ll have to pay a lot more for them.


Choosing the solution that’s right for you largely depends on how much you’re willing to spend on investing and how much work you’re willing to put in to monitor your investments. It may be worth talking to a financial advisor Should You Hire an Online Financial Advisor? Financial advisors can be a good way to save money, but not in all cases. Should you hire one? Well, it depends on several factors. Here are some things to consider. Read More to make sure you choose the right service.

Choose the Right Investments

There are a lot of different types of investments out there, and they each have their advantages and disadvantages. There are company stock, bonds, treasury bonds, mutual funds, exchange-traded funds, index funds, and more. They each have different advantages and disadvantages, and you’ll need to do some research to learn about them.

In general, prevailing wisdom states that low-cost index funds and similar investment options are the best way to go; you park your money there, leave it alone for 30 years or so, and when you go to take it out, you’ll have made a bunch of money on your initial investment. It’s a simple, low-effort, and relatively low-cost way to do things.



Of course, this is a huge simplification of your options and the decision-making process, and this is one of the parts of investing where talking to a professional can be hugely useful. Using a “robo-advisor,” or one of the automated investing solutions I mentioned above, also makes this part of the process a lot easier. In Clink, for example, you tell the app how much risk you’re willing to take on in your portfolio, from “very conservative” to “very aggressive,” and it distributes your funds accordingly.

No matter which strategy you decide to go with, make sure you’ve educated yourself and weighed your options carefully.

Patience and Discipline

Being able to make trades online is fantastically convenient, and makes the process of investing a lot easier. It also makes it easy to over-manage your portfolio, which is a bad idea. Making too many trades based on market movements is a recipe for disaster, even if you think you have a good idea of what you’re doing.

Before you start investing online, you need to be able to take the long view of your financial actions. Investing isn’t a get-rich-quick kind of thing. It’s a long-term strategy that requires planning, patience, and the self-control to not panic when the market takes a nosedive. Despite frequent fluctuations, most investments, over a long period of time, will have a solid return — don’t mess it up by trying to beat the market. It’s just not going to happen.

This is another advantage of using an automated solution; by ceding a good portion of your control over your portfolio to an automated system, even if you’re tempted to bail on a particular investment strategy, you can only do so much, and that will prevent you from making a big mistake.

Get Started Today

If you’re financially stable and committed to building wealth for your future self, your best investment strategy is to get started right away. The longer you can keep your money invested, the more of a return you’ll get — which will give you more money to develop the financial freedom you want.

Pearls Before Swine

Just remember to take the time for personal fulfillment while you’re at it.

Are you ready to start investing online? Which tools will you use? Or will you be working with a more traditional brokerage? Share your thoughts in the comments below!

Image credits: Mariusz Szczygiel via Shutterstock, hin255 via Shutterstock, zhu difeng via Shutterstock.

Related topics: Investments, Online Portfolio, Personal Finance.

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  1. Anonymous
    June 25, 2016 at 12:29 am

    FIRST AND THE MOST IMPORTANT RULE OF INVESTING - invest only money that you do not and will not need.

    "the generally expected return of a long-term investment in the stock market is 6–7%, "
    Don't expect 6-7% each and every year. The 6-7% figure is an AVERAGE annual return computed over the last 100+ years of stock market activity. In some years, like 2000, market gained well over 20%. In other years, like 2008, the market dropped about 25%.

    "And the internet has opened up a lot of great investment opportunities"
    The opportunities were there before the Internet, the Net just made them easier to access. The internet has also made it easier for scammers and shysters to perpetrate fraud on unsuspecting victims.

    "Choose the Right Investments"
    If you decide on investing in mutual funds, very carefully check what fees they charge. Some mutual funds charge 1-2% "annual maintenance" fee. One or two percent may not sound like much but on a $100,000 investment that is $1000-$2000 you have to pay each and every year. That is money that you could be investing.

    For beginner investors I would recommend investing in index funds. Vanguard charges between .03% and .1% maintenance fee on their index funds. Those are the lowest fees around.

    "There are also a number of online brokerages"
    Besides eTrade and TDAmeritrade, there is Scott Trade. All three have low trading fees. They also have tutorials, robo-advisors and online research tools.

    Whatever you do, DO NOT trust anybody's investment advice blindly. Stock advisors work either for themselves or a brokerage house, NOT for the investors. Their job is to make money for their brokerage house. They make their money when customers buy and sell stocks, bonds, mutual funds. It is their job to make their customers buy and sell.