Question: I've been hearing more and more lately about investing on the Internet. Should I be considering it?Answer: Yes, provided you have a clear picture of what it can and cannot do for you.
World Wide Web sites operated by brokers, mutual fund firms and other financial services businesses have much to offer investors -- speed, convenience and access to abundant information about investing, among other things. Chat rooms and other Internet facilities also give investors good ways to exchange ideas and opinions among themselves.
By all accounts, online investing is the way of the future, although it may never completely replace old-fashioned systems and techniques.
Yet electronic investing has received a lot of negative attention lately, in part because of its image as a world of trigger-happy day traders who never stop to learn much about the stocks or funds they buy and sell. Someday, many observers suggest, this is all going to come to a bad end.
It does indeed appear that a new breed of investors is trading, almost video-game style, through Internet brokers who charge very low commission rates -- less than $10 a trade, in many cases. History suggests that many of these people will wind up suffering painful losses, especially if the great bull market on Wall Street should slow down or expire altogether.
But investors can use the 'Net without losing their long-term perspective. The trick is to realize that a mechanism that makes it much easier and cheaper to buy and sell often doesn't automatically mean it is a good idea to buy and sell often.
Among the benefits of the Internet for long-term investors: Access at any time to up-to-date information on the status of your account with a broker or fund family. Handy reference to research reports, historical data and other information useful in making investment decisions. Hundreds of sites where you can browse, without cost, for information about retirement planning, saving for college, and other subjects.