Once upon a time, not so long ago, buying stocks online was not something possible. Instead, you had to find a broker working in a brick-and-mortar office, grab the newspaper to follow stock’s price, pick your old rotary phone, spin the wheel and give the guy a call to ask him to buy stocks for you!
The fees were high… very high so you wouldn’t call him only to buy a couple of shares at a time. You had to buy big blocks!
Well, fortunately enough, this time is over and you can now buy stocks online easily from the comfort of your home or even from your smartphone or tablet.
Almost every bank, or at least every bank I know of, offer their customers a platform to buy and sell stocks online. You can now be your own advisor and play the market like a Wall Street big shot in the comfort of your lazy boy!
I personally use my bank’s platform. It was convenient, transaction fees were high when I started in 2013 (30$) but are now in the norm (9,95$ per trade).
But, if you live in the US, there are other options to consider. Here, in Canada, we don’t have the same flexibility as US citizens.
I recently came across nice options in the US which are democratizing the access to the market. It is now not only possible to buy stocks online, but you can now even buy fee free. This means that you can buy stocks in small increments at the same time and slowly build a well diversified portfolio.
One of these companies is called Loyal3. I have no link with this company and I am not an affiliate either. I never even tried their service since I’m a Canadian and as such, I’m not eligible. But I’m intrigued by their concept. This company claims that you can start with as low as 10$ and that they charge no fees to either buy or sell a stock. I don’t know how they make money and certainly would want to know more before opening an account, but the concept is interesting.
With 10$ on the stock market, you can’t go very far for sure so that’s why Loyal3 offers to buy fractional shares for you. Isn’t it great? This can give access to the stock market to anyone with an online connection.
As a dividend growth investor, I’m interested in buying and holding stocks for as long as the companies I invest in remain strong. So, since I will keep my stocks for long periods of time, fees aren’t that important to me as long as they are not excessive.
But, the problem with the fees I pay is that I need to buy for at least 1500$ worth of stock per transaction to keep the fees affordable. 1500$ is a lot of bacon for most of us and as such, owning a well-diversified portfolio can take quite some time.
My portfolio isn’t currently properly diversified and I know it. It adds some risk to my investments but eventually things will get balanced.
With such an account as Loyal3, one can build a well-diversified portfolio easily.
There are other options too. Sharebuilder, a division of Capital One, offers a similar concept, but they charge 6,95$ per trade.
In Canada, what resembles the most to these options is Shareowner. For a flat fee of 40$ per transactions, they let you buy fractional shares of many companies at the same time, thus letting you build a diversified portfolio at a reasonable price.
I’m not sure I would open an account with any of these companies. They offer nice options, but less flexibility. I like to control the price I pay for a stock with a limit order and I like my brokerage account to be connected to my bank, a bank I know and trust, a bank with brick-and-mortar branches all around the country where I could go and complain if something would turn sour.
But I know that these platforms are getting popular among investors and I can understand why. Being able to buy fractional shares with no fees can help someone take advantage of dips more easily than I can. By buying frequently, one can dollar-cost-average his buying price easily while it’s harder for me to do so.
But whichever platform you’ll decide to use, this is to say that buying stocks online has become as easy, affordable an accessible as possible and that there are now no reasons for anyone to not take his finance under control!
Have you tried to use these platforms? What are your thoughts?
Image courtesy of Stuart Miles / FreeDigitalPhotos.net