Around a quarter of all U.S. households now have personal computers (PCs) with modems attached. That means they’re linked to the outside world by telephone line.
The modem boom (up 35 percent in just one year) is a shot across the bow of every traditional stockbroker, financial planner and mutual fund.
Boomer investors and the younger generation behind them live on-line. They don’t need intermediaries to get them investment information or take their orders. They don’t want to make phone calls and wait on hold “for the next available agent.” They can do it all on the Internet, 24 hours a day. A few years from now, a financial firm that’s not on the Web will effectively not be in business.
Managing money is the third most popular use of PCs (after games and teaching aids for children), according to a study by Jupiter Communications and FIND/SVP, New York City research firms on emerging technologies.
Nearly 7 million households are using assorted investment-related services, Jupiter says. Nearly 3 million are checking stock quotes.
Forrester Research, a Cambridge, Mass., consulting firm, estimates that the number of people with on-line trading accounts will approach 1.2 million by the end of the year and reach 10 million in 2001.
Investing by Web is not only convenient, it’s cheaper for investors who buy stocks and other products that carry sales commissions.
With the click of a mouse, you can compare the fees charged by one on-line broker with another. As a result, fees and commissions are coming down.
In March, Barron’s magazine ranked 26 on-line brokerage sites for reliability, ease of use, range of investment options, amount of research on tap and price charged for trading.
Its top picks: Discover Brokerage (formerly Lombard), still at (www.lombard.com), Waterhouse Securities (www.waterhouse.com) and E*Trade (www.etrade.com).
These firms’ minimum basic commissions are a low $12 to $15 per trade.
To invest electronically, all you need, besides a modem, is an account with an Internet Service Provider (look them up in the Yellow Pages if you’re not already on the Web). The ISP links you to the Web through a local telephone line.
It also provides you with a Web browser such as Netscape Navigator or Microsoft Internet Explorer. The browser helps you find the investment information you need and is truly easy to use. I’ve always been a technodummy, so if I say it’s easy, you can believe it.
With the Web at your fingertips, you have access to a world of investment information, much of it free. You can find company news, interviews with mutual fund managers, stock-price charts, market opinion–not to mention a lot of stock hype and guff.
Some sites help you figure out how well your investments are actually doing (many investors don’t have a clue). You enter your stocks and mutual funds and a calculator figures your annual percentage returns.
There are far too many interesting Web sites to list in a single column. But here are some places for mutual fund investors to start:
– NETworth (http://networth.galt.com) is a great free site, containing lots of fund information and historical data. You can get the funds’ current performance as tracked by Morningstar. There’s also a spot for stock investors to get quotes and company information.
– The Mutual Funds Home Page (http://www.brill.com) is also jammed with mutual fund stuff. You’ll find manager interviews, fund Web sites and 800 numbers, and links to other financial sites.
– The American Association of Individual Investors (http://www.aaii.org) is like getting an unending course in personal finance and investing, including computerized investing. This summer the site is free.
– For research, go to (http://www.investools.com). There, you can buy a wide variety of research reports, including the valuable $5 pages that Morningstar produces on individual mutual funds.
– The Wall Street Journal Interactive Edition (http://www.wsj.com) costs $49 ($29 for subscribers to the Journal’s print edition) and has current and recent Journal articles, access to Barron’s investment magazine and a slew of company news and global market data.
– For a free calculator that shows the effects of mutual fund sales fees on your investment return, go to (http://www.financenter.com) or (www.mfmag.com.)
– I suppose I should blush for mentioning something as old-fashioned as a book, but try “The Savvy Investor’s Internet Resource,” by Bryan Pfaffenberger and Claire Mencke (IDG Books, $34.99). It takes you through every type of investing and shows you how the Web can help.
For both newbies and regular investors, this book is the best site of all.
