Online Investing Hacks

Preface

In the past, many people stayed at the same job and lived in the same town their entire lives. Children often went to the same college as their parents and entered the same line of work. Even naming one’s male offspring was easy: add Junior to the father’s name. Financial decisions were simple as well—companies offered pension plans that managed employees’ retirement funds for them. The local bank was the place for the family checking account, a savings account, and any required loans and mortgages. The bank manager knew customers and recommended the best products for their needs.

Now, it’s more, faster, and more complicated. Every aspect of our lives requires more decisions made in less time. Workers change jobs every few years, either voluntarily or due to layoffs. Families move from one city to another, or from one house to another. Children’s names are now a major outlet for parental creativity, and even deciding how to combine each spouse’s last name can be a significant negotiation.

And our finances seem to be the most demanding. People have to fend for themselves. Company-funded pension plans are as scarce as hens’ teeth. Instead, employees contribute their own money to 401(k) retirement plans and IRA accounts, and have to decide how to invest for retirement. Going to college is practically a requirement for survival, while the costs of college strain the most affluent budgets. The choices for every aspect of personal finance and investing are overwhelming: dozens of account types (the burgeoning tax code ensures an ever-expanding list of options), hundreds of financial institutions located in every state of the union and some that operate entirely online, thousands of savings vehicles, stocks, mutual funds, and other types of investments. Each of these choices requires careful study, because the fine print has become finer even as our eyes become weaker.

The result? We need more education, more information, and more assistance with our financial lives, while companies work furiously to remove human interaction from their customer service processes. Fortunately, the Web has grown to fill the gap. Online investing isn’t a new tool. Just about every investor has used the Web to perform at least some aspect of managing his finances. So why does online investing continue to generate a buzz? Because the Web changed everything. Financial information was once expensive, hard to obtain, and available only to those who knew enough to ask their brokers. Now, it’s available to everyone, at all hours of the day, and much of it is free.

Competition in the financial world has driven banks, brokerages, insurance companies, and every other type of financial institution to vie for customers, while at the same time containing or reducing costs. In many instances, the solution is online services. Financial companies introduce web-based services with lower fees to keep existing customers happy and to attract new customers from a larger geographical area. In addition, these companies often publish educational articles, training courses, financial calculators, and other valuable financial tools to capture potential customers’ attention. In most cases, you can take advantage of these tools regardless of whether you decide to become a customer.

The problem today is the magnitude of available information. With financial institutions and dot-com companies struggling to become the newest must-have financial bookmark, the education, information, or service you want is probably out there. But finding it is another matter. To make matters worse, the Web changes constantly: new sites with incredibly helpful new tools appear; old favorites drop the features you like or hide them somewhere; the URLs you diligently save as bookmarks stop working; and the user-interface changes make you wonder whether you’re on the right page. The Web offers an opportunity to simplify our financial lives. We don’t want its abundance and constant renewal to ruin our chances.