A:

Thanks to the internet, there is a huge range of service providers that investors can use to obtain investment research and execute trades in a cost-effective and timely manner. Some of the information providers are free, while others subscription based.

Websites such as Investopedia and Yahoo Finance provide investors with a vast array of free stock information such as company financial statements, key earnings ratios and recent company news. This "raw data", however, is only useful if the investor is knowledgeable in what the information is conveying. For example, knowing a company's PEG ratio is only useful if the investor understands the ratio's underlying concept.

There are many variables to weigh when considering stock buys and the decision-making process can be complex. Due to the sheer volume and complexity of this raw data, subscription-based advisory and/or analyst services can be extremely useful because they help disseminate and analyze the raw data for investors. These types of services provide market analysis as well as potential stock picks based on their analyses of a wide range of companies and industries.

The most inexpensive way to purchase company shares is through a discount broker. A discount broker provides little financial advice, while the more expensive full-service broker provides comprehensive services like advice on stock selections and financial planning. If you use some of the free information sources and/or subscription-based analysis services in combination with the discount broker, it is possible to keep costs relatively low.

The more you educate yourself about the financial world, the less you will have to rely on investment advisors or full-service brokers. The more comfortable investors are with the stock market, the greater the benefit from going with a discount broker or online broker such as Scottrade and E*Trade, where fees are as low as $5-$10 per trade, compared to full-service brokers where fees are several hundred dollars per trade. And lower commissions means you'll have more money to invest.

The fastest and cheapest way to invest in the stock market is to conduct your own research using the free financial websites and to trade with discount brokers. Of course, the responsibility of making good or bad stock picks rests solely with you.

(For further reading, see Getting To Know Stock Screeners and our tutorial Brokers and Online Trading.)

RELATED FAQS
  1. There are so many stockbrokers out there. How do I go about choosing the best one ...

    If you decide that you have the knowledge and experience to take on stock investing, or if you feel you would like to give ... Read Answer >>
  2. How can an investor profit from the increase in popularity of discount brokerages?

    Find out how investors benefit when brokerages compete with each other, and how discount brokerages are changing the market ... Read Answer >>
Related Articles
  1. Investing

    Discount Broker

    A stockbroker who carries out buy and sell orders at a reduced commission compared to a full-service broker, but provides no investment advice.
  2. Investing

    Why Use a Discount Broker?

    A discount broker is a stockbroker that does not offer clients investment advice, but trades shares for a smaller commission than a full-service broker.
  3. Investing

    Picking Your First Broker

    If you're a rookie investor, your first big investment decision should be an informed one. Read about how to choose your first broker here.
  4. Financial Advisor

    How Brokerage Fees Work

    What you need to know about fees when choosing between a full service and discount broker.
  5. Investing

    5 Misconceptions About Discount Brokers

    While discount brokers are the perfect choice for some investors, their business model could be detrimental to others.
  6. Investing

    Can I Sell Or Buy Stock By Myself?

    Investors cannot simply telephone a company and buy its shares. They need a stockbroker for that, and there are two basic types of brokers they can choose.
  7. Financial Advisor

    Evaluating Your Stock Broker

    Make sure you're getting the best service by staying informed and involved.
  8. Financial Advisor

    Is A Stockbroker Career For You?

    Discover what you need to become a stockbroker and the variety of opportunities that are now available to you.
  9. Financial Advisor

    Is Your Broker Acting In Your Best Interest?

    Learn the clues you'll need to determine whether you've chosen a reputable professional.
  10. Investing

    How The Internet Has Changed Investing

    Discover the significant impact the Internet has had on how we invest and view the markets.
RELATED TERMS
  1. Full-Service Broker

    A broker that provides a large variety of services to its clients, ...
  2. Deep Discount Broker

    An agent that mediates sales and exchanges between securities ...
  3. Broker

    1. An individual or firm that charges a fee or commission for ...
  4. May Day

    Refers to May 1, 1975, when brokerages changed from a fixed commission ...
  5. Each Way

    A slang phrase used when a broker earns commissions from both ...
  6. Forex Broker

    Firms that provide currency traders with access to a trading ...
Hot Definitions
  1. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  2. Investing

    The act of committing money or capital to an endeavor with the expectation of obtaining an additional income or profit.
  3. Stagflation

    A condition of slow economic growth and relatively high unemployment - a time of stagnation - accompanied by a rise in prices, ...
  4. Notional Value

    The total value of a leveraged position's assets. This term is commonly used in the options, futures and currency markets ...
  5. Interest Expense

    The cost incurred by an entity for borrowed funds. Interest expense is a non-operating expense shown on the income statement. ...
  6. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
Trading Center