The Internet as an Investment Tool
The Web can help do this cheaply, accurately, at any time of day and without consulting a stockbroker. A Web calculator from a respected site can provide useful ballpark numbers for a mortgage or an easy way to benchmark a price. Get a good antivirus make a lot on the Internet with investments use it.
Encryption is important, too. Look for bit encryption when transmitting confidential data over the Internet. Official positions are determined through certain specific committee procedures, due process and deliberation.
A tool whose time has come, the Internet—with its fast access to voluminous information—has revolutionized the retail securities marketplace and is rapidly changing the financial arenas in which CPAs and their clients interact. A CPA not yet using the Web to monitor and manage personal or client finances almost certainly will have to catch up with clients who do.
Source: Jupiter Research. Best of all they can do it easily, cheaply, accurately, at any time of day—and without consulting a broker. This article looks into some of the many electronic tools CPAs can use to help clients right now.
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Although the medium is relatively new, the benchmarks against which stock performance is measured are still the major indexes. Sites such as www. So do major wire service Web sites such as APOnline www.
Other commonly available indexes or benchmark rates are the federal-funds rate the rate at which banks lend each other money overnightthe EAFE European, Australian and Far East index, the Wilshirethe commodities indexes and foreign exchange rates. Using such a model portfolio, investors can test their judgment while risking only pride. For example, www. The site allows the user to name the portfolio, making it easy to follow more than one.
A user can tell whether the portfolio is up or down from inception as well as from day to day. The www. It would be wise to look at several sites before settling on one. Some model portfolios offer more detail than others. Access is not always reliable, however. Customers linked to one major broker lost the ability to buy or sell for part of a day because of computer troubles at the brokerage.
Other significant glitches have occurred since then. Trading fees are higher than with a discount broker, and they charge a commission on each trade. Edwards are just two examples—calling them up for tax data and telling clients who are shopping for a broker about them.
They charge lower fees, offer fewer services and are suitable for investors who have sufficient expertise and research to make their own decisions. Because transactions on the Internet are not yet as reliable as those conducted by telephone, their services may be more prone to disruption, however. An investor can expect stock charts, screening tools and analyst research reports from an online broker, but what else is out there?
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Types of products. Some online brokers do not handle options, penny stocks or foreign stock trades.
Large- and mid-cap U. Typically, commissions are higher on small trades and proportionately lower on big ones.
Some online brokers charge more for human assistance. Payment methods and interest rates. As with traditional accounts, online transactions may be paid for by check, direct wire transfer and transfers between accounts for example, a transfer from a money market account held at the same firm as the brokerage account.
Margin interest rates vary widely from option price function to broker. The speed of electronic trade confirmations and statements varies greatly among brokerages.
Types of accounts. Online cash, margin and IRA accounts are available; cash management accounts are not quite as common. A CPA doing research for a client should find out if the broker offers money market, checking and online-bill-paying accounts and what the fees are for these services.
Is interest paid on the account? Is the account balance swept into the money market account at the end of each trading day?
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Discount brokers are expanding their banking services in an attempt to make the most from each customer. Online corporate and partnership accounts are relatively rare.
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Telephone service. An investor using a full-service brokerage expects to be able to reach the broker by phone when the markets are open.
At many, a trade can be executed through automated touch-tone dialing. Some discount brokers are Internet-only. So far, the year-old technology is more reliable than the Internet.
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Con Artists and Scams The Web has made it quicker and cheaper to reach potential victims, so remember, If it sounds too good to be true, it probably is. This old saw is as accurate today as it was in the s, when the telephone was the cutting-edge technology that crooks exploited to hook trusting investors.
Some Internet stings employ new technology to perpetrate old frauds, including Ponzi and pyramid schemes, make a lot on the Internet with investments offerings and pump-and-dump activity this last famously perpetrated by a high school student in Penny-stock and affinity scams crop up on the Web, too.
On the Internet there are Web sites, newsgroups, chatrooms and bulletin boards devoted to exposing securities fraud. A CPA who suspects a client may have been scammed can drop a line to enforcement sec.
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A small but growing number of CPA firms have opened pension accounts through online brokers. Such brokers let clients process application paperwork online. Thanks to self-directed Internet brokerage accounts, employee participants in k plans can invest a portion of their retirement assets in an array of stocks and mutual funds.
A few years ago this flexibility was rare, but companies now expect this option when they are comparison shopping for k plans to offer employees. Retirement plans are available through both mutual fund companies, such as Putnam, and full-service brokers, such as Fidelity, for example. Web-based information is available at www. The Search k product guide gives CPA financial advisers access to more than 60 different data fields, including product descriptions, plan administration, investment vehicles, employee communication and record-keeping information.
CPAs should use it often and make sure that staff members do, too. Encryption is an important safeguard for financial transactions. Levels of encryption are measured in bits.
The higher the number of bits, the better the level of encryption. The highest level generally available in North America at this time is bit encryption, so this is what to look for when transmitting confidential data over the Internet.