What is the cheapest, fastest way to research, buy and trade stock?

By Investopedia Staff AAA
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.)

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