An online broker can save you some real money!

Online brokers are taking the investment world by storm! By moving your portfolio to an online broker, you can save a great deal in commissions and fees. But dealing with an online broker is quite different from doing business with your local Merrill-Lynch office.

You'll typically pay much smaller commissions and fewer transaction fees when dealing with an online broker. Why Two reasons: automation and fewer services.

Online brokerage accounts are automated. Your trades are ordered and placed by computer software instead of a real life broker. This streamlines the trading process and saves you money.

With a full service broker, in exchange for those higher commissions and transaction fees, you'll get personalized advice and professional research services that you simply won't get with most online brokers.

But if you prefer doing your own research, switching to an online broker is a wise move. Why pay for services that you prefer to do for yourself anyway Of course the downside is if your investments don't turn out so well, you won't have a broker to blame.

Most Online brokerage firms offer all of the regular investment vehicles, including stocks, bonds, CDs, and mutual funds. They also offer comprehensive online tools for researching and evaluating prospective investments.

Online brokers make it easy to monitor the performance of your investment portfolio. A wide variety of reports can be accessed online or downloaded to a spreadsheet, which makes it easy to see where you stand at a glance.

The bottom line is you can save a lot of money and

take complete control of your own investment portfolio by switching to an online broker. But if you prefer the guidance and hand-holding provided by a professional broker, you would probably better off staying with your current brokerage firm.

How to Open an Online Brokerage Account

There are normally three ways on how to open an Online Broker account. The first one is online; the second is by email and last but not least by postal mail. However, online-opening is normally not possible for foreigners.

Online opening:

Simply follow the instructions given by your selected Online Broker. The menus are easy to follow. Have your identification and wealth information ready. Some questions will strive your possible investment style and objectives. If you have finished print out all the formulas (for your books) and transmit the information. Online applications will normally processed fast and you will get to hear within two days up to a week about your account status. Also read the section email and postal mail below, I have provided additional information that is also valid for this section.

Email and postal mail:

Print out the application forms and fill it out by pen. Some Online brokerage offer the opportunity to fill out the forms directly and print it out afterwards. What will normally be asked

- Type of account

- Account owner information

- Account co-owner information

- Funding of your account

- What kind of trade confirmations and account statements you would like to receive

- Information about your net worth

- Information if you would like to trade options and futures

Along with the printed forms, you will need to send photocopies of your identification (normally passport or ID-card).

If you are a foreigner, you will need to fill out a special form called W-8BEN. This is a certificate of foreign status of beneficial owner for US tax withholding.

Allow up to two weeks for procession of your application. Once everything is done you will get information (either by email or by postal mail) along with your account number. If you got your account number, you are now able to fund your new account. Without funding, you wont be able to trade. Check frequently if your funds have been credited to your new account. If thats the case you are ready to trade.

One important thing! Before you open an Online Broker account please be sure that your Online Broker supports the securities you want to trade.

One of the advantages of the Internet is now you have the opportunity to buy and sell stocks online, using an online brokerage account.

Instructions

STEP 1: Decide what your individual financial needs are: How much information about stocks do you need Do you need to be able to reach a live person by phone Are you more concerned with ease of use and speed

STEP 2: Decide which online broker is best for you based on your needs.

STEP 3: Decide how much money you'd like to put into your new account. Some brokers have minimum requirements. Some people start with a few hundred dollars, others with more; the amount depends on your financial situation.

STEP 4: Complete an account application for your selected broker. Most brokers have an online application, but you will probably have to send in some paperwork with your signature as well.

Tips & Warnings

Peter Lynch, a successful money manager and author of several books about investing, recommends that you never put any money into a brokerage account if you are going to need the money in the next six months.

If you're new to investing, select a broker that provides telephone service as well as online service. A live person to speak with can be a real comfort when you're just starting out.

Focus on smart picks and good timing, not on commissions. Very few people lose their money because of paying high fees. They almost always lose money because of bad stocks or bad timing.

Some online brokers allow you the option of wiring money instead of sending a check, which can allow you to open your account right away.

Not all online brokers provide telephone service with online trading. Be sure your broker offers that option if you want it.

Some Online brokerage that provide telephone service can have prohibitively long wait times to get through.