trading

8 Signs You're a "Helicopter Investor" (And How to Stop)

Tim Lemke — Fri, 01 Dec 2017 10:00:06 +0000

We're all familiar with the term "helicopter parent" in reference to the mom or dad that hovers over every aspect of their child's life. Do you have a similar approach to investing? Do you obsess over every detail of your portfolio? Are you constantly checking in, even when it's clear your stocks are handling things pretty well on their own?

If so, you may be a "helicopter investor," and it may be costing you money as well as your peace of mind. Watch out for these warning signs. (See also: 11 Investment Mistakes We All Make)

1. You check your portfolio every day

How often do you log in to see your investment account? Are you checking in every day, or even multiple times a day? Monitoring your investments is important, but there's no real need to check in on them that frequently. Most people can get away with looking at things once a week, and could probably go months without a check-in as long as they are paying attention to broader market movements.

Checking your investments frequently might tempt you to fiddle with them. You might sell or buy stocks based on emotion. You'll get angry when investments go down slightly, and irrationally happy when they go up.

Consider setting a personal policy of checking your investments once a week (or even less) at a certain time, and have a plan for what you want to accomplish when you do. (See also: 5 Essentials for Building a Profitable Portfolio)

2. You watch a lot of financial news programs

Any smart investor should follow the news and be aware of market trends, but tuning in constantly to CNBC or another financial channel is completely unnecessary. If you want to tune in once to see where the market closes, fine. But you never want to find yourself watching for hours a day, reacting to every stock tip and piece of advice from a talking head.

Proper retirement investing requires time and patience. Watching too much financial news can lead you to think that every business event is more significant than it actually is. Unless you are a day trader or professionally manage a fund, you can do without the information overload. (See also: Want Your Investments to Do Better? Stop Watching the News)

3. You subscribe to too many financial publications

There are many great financial publications out there that can help you hone your investing prowess, but many of them also have similar content. Subscribing to one or two publications is useful, but subscribing to a half dozen or more or is overkill. This is especially true today, when there is a lot of solid advice available online for free.

Consider subscribing to one or two well-respected financial news sources to stay on top of the latest trends and market performance. Chances are, you'll make out just fine.

4. You have alerts on your phone

Smartphone apps have certainly made it easier to track and trade investments. I draw the line, however, in setting up alerts to tell you about the activity of specific investments. The average investor does not need to know, for example, that Amazon's stock just hit $180 per share, or that the market fell 1 percent on the day.

Ideally, your investments are working behind the scenes to make you money while you live your life. Turn off any notifications that would encourage you to check your investments more often than necessary. In fact, consider getting rid of the smartphone investing apps altogether.

5. You panic when investments decline

Guess what? Sometimes your investments lose money. They are not guaranteed to go up day after day. If this bothers you, and you find yourself buying and selling stocks while in the midst of emotional meltdowns, you may be a helicopter investor.

No one wants to see stocks decline, but if you are invested in the long term, you should be able to overcome a blip in the market. And any money you need within a few years shouldn't be tied up in the markets anyway.

If you're getting emotional every time you see stocks go down, do yourself a favor and back away from your computer screen. Breathe. Go do something else. Your portfolio will be fine, and you won't have to deal with the shame of making a bad situation worse by reacting in the moment.

6. You obsess over rebalancing

It's always a good idea to check your portfolio to make sure it's not out of whack. You don't want to wake up one morning and find that you're 85 percent invested in volatile tech stocks, for example. A properly balanced portfolio will be well-diversified and will match your risk tolerance.

However, most portfolios don't need to be rebalanced all that often. Remember that every time you rebalance, you are likely to incur transaction fees for every trade, and there may be tax implications as well. There's a cost to rebalancing too frequently. Once a year or once every six months for a rebalancing check-in should usually do the trick.

7. You're constantly going after the hottest thing

So you heard some buzz about Bitcoin, and now you want in. You saw Facebook's shares rise 5 percent in a week, so you jump. You're paying such close attention to your investments and the market that you're going after short-term hits rather than maintaining a long-term, disciplined approach.

Going after the hot thing often results in you buying high and selling low, which is the opposite of the ideal investing approach. It's fine to be generally aware of what's hot in the markets, but don't be like the cat going after the shiny toy.

8. Transaction fees and taxes are cutting into your gains

Buying and selling stocks has gotten cheaper in recent years, but most discount brokerages will still charge you at least $4.95 for every trade. So if you are constantly checking your portfolio and constantly buying and selling, this can add up. Consider that if you buy 10 shares of a stock at $50 a share, you've automatically given away 1 percent of your investment. If you are buying and selling smaller lots, that's an even higher percentage.

Additionally, selling stocks can come with tax implications if you are trading in a taxable brokerage account. If you sell a stock soon after buying it, you may pay a short-term capital gains rate, which can be as high as 39.6 percent.

Buying and selling stocks can be enjoyable, but if you do it too frequently, there's a cost involved. Hovering over your portfolio and constantly looking to trade can actually make a dent in your earnings over time. (See also: 4 Sneaky Investment Fees to Watch For)

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This article is from Tim Lemke of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

What Is Cryptocurrency, Anyway?

Damian Davila — Wed, 11 Oct 2017 08:30:06 +0000

Investors are always looking for the next "big thing." Throughout 2017, cryptocurrencies have been experiencing a surge in market valuations with Bitcoin and Ethereum trading above $4,000 and $300, respectively, as of August.

With the price of one Bitcoin (BTC) trading well above the price of one ounce of gold, more and more people are jumping on the cryptocurrency bandwagon: On August 8, 2011, there were only 8,638 BTC transactions. Fast forward six years, and the daily number of BTC transactions has surged to 260,955! (See also: Here's Everything You Need to Get Started With Bitcoin)

So what exactly are cryptocurrencies, and should you invest?

What is cryptocurrency?

Basically, cryptocurrency is a digital or virtual asset that uses cryptography as a security measure. Designed by somebody under the pseudonym "Satoshi Nakamoto" back in 2009, Bitcoin was the very first cryptocurrency. Today, there are over 1,050 cryptocurrencies (often referred to as "coins") with funny names, including Dogecoin, Veritaseum, Factom, and Counterparty. However, their valuations are no joke: The total market capitalization of all coins stood at $151 billion as of August 23, 2017.

Unlike currencies issued by nations, cryptocurrencies can be issued by anybody with access to the right technology. Capitalizing on this fact, tech entrepreneurs all around the world are launching coins every day with the promise that once products or services are available, the coins will be redeemable for those products and services. For example, the developers behind Siacoin provide a decentralized storage marketplace in which hosts compete for your business, and those behind Monero deliver a private and untraceable cryptocurrency. Research firm Smith & Crown reports that so far in 2017, 65 projects have raised over $520 million in coins.

Should you invest in cryptocurrency?

The upside potential of a coin is huge, but this doesn't mean that cryptos are for everybody. There are a few important details you should know before you dive in.

There is high volatility

Take for example Neo (formerly AntShares) which was trading at $1.50 per coin on June 10, 2017 and peaked at $51.94 per coin on August 13, 2017. There are very few places that you can get a 3,362 percent return in just two months. But what goes up eventually comes down and Neo traded at $31.76 on August 18, 2017. Could you stomach over a 38 percent drop in value of your investment in just four days? With big price swings on a daily basis, coins aren't for investors with low tolerance to risk.

Investing requires some tech know-how

Buying and trading cryptocurrency requires you to be comfortable using some desktop or smartphone applications. Attention to detail is critical to avoid losing your hard-earned coins. Here are some important things to note:

Typing one wrong character in your 33- to 34-character long Bitcoin address when doing transactions could mean that your money ends up in somebody else's account.
Sending cryptocurrency into the wrong address (say, for example, sending Ethereum Classic coins into an Ethereum wallet address) will make your cryptocurrency disappear. Most exchanges won't even help you try to recover the misplaced coins for small amounts (Bittrex sets a $5,000 minimum) and will charge you a hefty fee for the recovery.
All exchanges recommend doing a small test amount before doing a large deposit or withdrawal.

The rules are always changing

With more and more people buying and selling cryptocurrencies, more government agencies at different levels are creating laws that affect consumers in different ways. For example, here are a few regulations that have been placed in recent years:

In 2014, The IRS deemed a cryptocurrency as property. This means that the same general tax principles used for reporting the sale of a piece of land would apply to the sale of 10 BTC (around $42,330 at the time this article was written).
In 2015, the New York State Department of Financial Services (NYDFS) passed the BitLicense regulatory framework, requiring Bitcoin companies serving New York residents to keep detailed records of all users in that state. Claiming concerns for user privacy, Kraken and Bitfinex decided not to serve users residing in this state.
In mid 2017, the Hawaii Division of Financial Institutions (DFI) created regulatory policies that required exchanges to hold cash reserves equivalent to the value of cryptocurrencies held by Hawaii residents. This requirement prompted all exchanges, including Coinbase, to stop operating in Hawaii or postpone their plans to open in that state.

Transaction wait times can vary

Despite the claims that cryptos are the way of the future, it surely can feel that you're back in the stone age waiting for a Bitcoin transaction to clear. In order to verify transactions, exchanges rely on a number of confirmations from the network. Depending on the volume of transactions and other factors, the wait time can vary from a few minutes to several hours. Waiting for a purchase of $5,000 worth of Litecoin could be a nerve racking experience for a new (and even experienced) investor.

This delay in transaction time also means that you won't necessarily get the price you wanted when buying or selling your coins. On Saturday August 19, 2017, Bitcoin Cash was trading as high as $996.92. By Tuesday August 22, 2017, one coin was now trading around $582. If you had been trying to dump your coins on Tuesday, you would probably have done so at a price much different from the one you originally wanted.

There are liquidity issues

With over 1,000 cryptocurrencies to choose from, you may end up with a "winner" that performs well for some time. But as government laws or exchange rules evolve, your coin of choice may be dropped from several exchanges.

IOTA is a great example. U.S. residents could buy IOTA from Bitfinex, but on August 11, 2017 the exchange announced that it would stop accepting new U.S. customers and will discontinue services to all current ones over the next 90 days. If you held IOTA, you're now forced to seek a new exchange to trade and/or wallet to store your coins. In the very worst case scenario, you may have to liquidate your position to avoid losing your money. Just ask owners of SpaceBIT, Quebecoin, and DAO.

The bottom line: Trade cautiously

There are several individuals who are making money trading Bitcoin and other cryptocurrencies. If you had purchased $100 BTC on January 1, 2011, you would have acquired 333.33 coins at $0.30 each. By August 24, 2017, that original investment would be worth over $1.4 million!

However, make sure that you understand all the potential risks involved with these virtual currencies. Given their inherent volatility, don't bet the house on cryptocurrencies. Additionally, to have a true picture of how much money you're making with cryptocurrencies, include all applicable fees. Remember that every cryptocurrency transaction, whether it's a purchase, sale, deposit, or withdrawal has a fee from an exchange, financial institution, or both. Happy trading!

[Disclaimer: The author owns some Bitcoin and Siacoin. He received no payment from any of the cryptocurrencies or exchanges mentioned in this article.]

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This article is from Damian Davila of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

8 Surprising Ways Confidence Can Hurt Your Investments

Tim Lemke — Wed, 26 Jul 2017 08:00:17 +0000

There may come a moment when you feel like you have this investing thing all figured out. You've made some great stock picks and your portfolio is going gangbusters. But are you letting your confidence get the best of you and your investments?

Being confident is OK. You need some confidence in yourself to invest in the first place. But being too cocky can lead you to make bad investment choices, and have a blind spot to your own weaknesses. Here are some of the ways confidence may actually hurt your investments.

1. You develop a selective memory

Maybe you bought shares of Facebook when they were trading below $25, and have made a killing on the investment since. You like to hold up that one purchase as proof of your genius as an investor. But are you forgetting about the other investments that didn't do so well? On balance, are you really any smarter than anyone else out there?

Don't let your memory of one great decision delude you into thinking you have a special gift as an investor. Doing so can make you believe that every stock will eventually turn out to be a winner, even if there's no rational basis for your confidence.

2. You have too much faith in the market

While it's true that history shows the stock market has gone up consistently over time, it's still important to protect your investments against a possible downturn. As you get older and approach retirement age, consider shifting some investments into less volatile instruments, such as bonds, even if you believe the market will continue to go up.

It's also important to avoid being too optimistic about markets in the short term. If you're investing money that you need in a year or two, the stock market may not be the best place to put it. Having faith in the market is crucial to building wealth over time, but protecting your investments against a down period is also part of the formula for success.

3. Your portfolio is not properly balanced

So you've had some great success with some of your investments, and decide to buy more shares of those that have done the best. There's nothing wrong with buying a lot of something if it performs well for you, but it's important to keep your overall portfolio from getting out of whack. This means not being too heavily invested in one particular stock or group of stocks.

Ideally, your portfolio should have a nice mix of stocks from various industries, sectors, and asset classes. Depending on your retirement age, mixing in some bonds and dividend stocks may also make sense. You may fall in love with a certain investment, but you should not let it dominate your portfolio. Diversification is key to mitigating risk. (See also: The Basics of Asset Allocation)

4. You're taking on too much risk

Investing is not without risk, and you must be comfortable with that if you plan to accumulate wealth over time. But don't be too tempted to take on extra risk just to chase higher returns. It's one thing to invest heavily in stocks, but it can be financial suicide to go after notoriously volatile investments, or to engage in risky practices like trading on margin or buying and selling options.

The best approach is to build a portfolio that roughly performs in line with the whole stock market, ensuring that you'll likely make money over time but will avoid catastrophic downturns that wipe out your whole savings.

5. You never check up on your investments

For most people, it's not necessary to check your investments every day and obsess over every movement in the markets. But you don't want to completely ignore your investment accounts, either. Even if you are invested in simple, reliable things like index funds, an occasional check-in is usually a good idea. (See also: The 4 Best Investments for Lazy Investors)

Without a checkup, you may be unaware that certain investments are underperforming. You might allow your portfolio to become unbalanced, leaving you under- or over-invested in some areas. You may be left unaware of company sales or mergers that result in changes to your investment mix. Don't get cocky; the stock market has gone up reliably over time, but your investments still need some tending to from time to time.

6. You trade too often

Let's face it: Buying and selling stocks can be fun. And when you feel confident in your stock picking abilities, you'll feel the urge to trade stocks frequently. You may even feel like you can "time" the market. But trading frequently has financial consequences.

First, if your stocks are in a taxable brokerage account, you'll end up paying tax on any gains when you sell. Second, most brokerage firms charge a commission for every trade. These expenses can put a dent in the value of your portfolio.

7. You miss out on popular, but well-performing investments

Imagine there's a hot stock that everyone is buying. But you stay away, because you think everyone else is dumber than you. Your confidence got in the way of rationally examining an investment on its merits rather than being influenced by the decisions of others. Buying a stock just because it's popular is silly, but so is refusing to buy it for the same reason. (See also: 7 Everyday Things That Are Surprisingly Awesome Investments)

8. You hold on to investments too long

Years ago, you bought 100 shares of OmniCorp and it netted you a massive return in the first year. You still have some of those shares, but the company has since been struggling, and may even declare bankruptcy. But still, you refuse to cut your losses and sell, because you made so much money from this stock early on. You are utterly convinced the company will turn things around, despite all evidence to the contrary. This is a dangerous mentality to have, and can cost you plenty in the long run.

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This article is from Tim Lemke of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How the Pilgrims Did Personal Finance

Tim Lemke — Fri, 04 Nov 2016 09:00:09 +0000

It's the time of year when we celebrate the Pilgrims crossing over to the New World and settling the land we now call America. The stories of the Pilgrims' courage in traveling on the Mayflower and surviving those early years are legendary. But they did not survive and eventually thrive without some financial savvy.

Are there money lessons to be learned from the Pilgrims, even though they had little money to begin with? Yes. Here's a look at what we know about the Pilgrims and their financial habits.

1. They Were Deeply in Debt for Many Years

The Pilgrims' journey to the New World was financed by people who might have sympathized with their desire for religious freedom, but these businessmen believed the colony would actually generate a big financial return. In reality, the Pilgrims asked their investors repeatedly for more money just to survive. An initial debt of as little as 1,200 British pounds grew to as much as 7,000 pounds, and the Pilgrims weren't out of debt for almost 30 years, according to the Pilgrim Hall Museum. That would be hundreds of thousands of pounds today.

2. They Had Little Currency, So They Used Beads

When the Pilgrims arrived in Massachusetts, they didn't have much in the way of real money — and it's not like they had any ATMs to go to. So, they instead relied on something called wampum, or strings of beads made of shells. According to The Mayflower and the Pilgrims New World, wampum was a remarkable innovative currency, with purple beads worth twice as much as white beads, and rules governing the quality, shape, and size. It quickly became the defacto currency for trading with the Native Americans.

3. They Were Thrifty

No question, the Pilgrims were forced to make do with the bare necessities. They grew and hunted their own food. They made wood slab homes from wood they chopped themselves. In fact, they were probably even more thrifty than popular images suggest. Those buckles you often see depicted on Pilgrims' shoes and hats? Those were unlikely to have been there, as Pilgrims more likely used simple leather and laces. The myth of the buckles arose from artists during the Victorian era.

4. They Were Communists — Then They Were Capitalists

When the Pilgrims first arrived, they experimented with something called "Common Course," in which all of the settlers owned property together. But it didn't last: "Because they could not reap the fruits of their labors, no one had any incentive to work, and the system failed — confusion, thievery and famine ensued."

By 1623, the Pilgrims divided the land equally, and an early form of capitalism began.

Conservative organizations and politicians have hailed the Pilgrims as an example of America rejecting communism for capitalism, even back then. Things are probably a little more complicated than that, but there's ample evidence that the colony began to thrive over time when each settler had land of his or her own.

5. They "Pivoted"

These days, you often hear about young startup companies shifting their focus or even their entire business concept due to market conditions. This is called a "pivot." And the Pilgrims were pretty good at pivoting. Early on, they tried to make money off the fur trade. But by 1650, the beavers they relied on became scarce, and they faced competition that made it hard to expand their operation. So, they switched to fish and lumber, and those became main revenue sources.

This article is from Tim Lemke of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

8 Signs an ETF Isn't Right for You

Tim Lemke — Thu, 03 Nov 2016 09:30:25 +0000

In recent years, exchange traded funds, or ETFs, have become a common part of many retirement portfolios. They work much like mutual funds, but can be traded throughout the day and often have lower costs. But how do you know if an ETF makes sense for you? After all, there are literally thousands of ETFs available, all with unique characteristics and goals.

Most financial advisers suggest that investors keep things simple by finding ETFs that track major benchmark indexes, such as the S&P 500. They should generally have low fees and fit in with other investments in your portfolio, too.

Here are some key ways to determine if an ETF isn't right for you.

1. It Has High Fees

Anytime you purchase a mutual fund or ETF, it's important to note how much of your money is going to fund managers and other expenses. High fees can take a big cut out of your overall earnings, and there's little evidence that ETFs with higher fees perform better than cheaper ones. It's possible to own very solid ETFs with expense ratios at 0.1% or lower. If your ETF's expense ratio is significantly higher, it may be time to invest in something else.

"Anything above 0.3%, and it gets a little excessive," says Justin Halverson of Great Waters Financial in Minneapolis.

2. You Don't Understand It

As ETFs have grown in popularity, they've also grown in number — and complexity. That means there are many "boutique" ETFs with very unique philosophies and goals. There are ETFs that zero in on very specific industries or market sectors. There are ETFs that do elaborate things involving leverage, or track obscure indexes. For most investors, these ETFs are complicated and unnecessary.

"You can get as fancy as you want with it," said Charlie Harriman, a financial adviser at Cloud Investments LLC in Huntsville, Alabama. "We usually advise that investors stick with the staples and things they know."

3. It's Too Risky

Some of the unique ETFs mentioned above are designed to generate big returns in some cases, but there's a huge downside if markets go south. Some ETFs use leverage to potentially amplify returns by two or three times an underlying index — thus, they can amplify losses during downturns. The average investor who is saving for the long term does not need to take on additional risk with ETFs that are designed for short-term trading.

4. It's Too Conservative

It's important that your investments match up with your financial goals. This means that if you're a young investor, you probably don't need a bonds ETF, or an ETF with low-growth dividend stocks. These types of ETFs may help you avoid a big loss during a market downturn, but you'll never be able to amass the kind of wealth you need in retirement unless you get a bit more aggressive.

5. Its Holdings Overlap With Other Things You Own

Diversification is great, but sometimes you can go overboard. When you invest in an ETF, you are getting exposure to a wide range of stocks, and there may be other ETFs with similar holdings. For instance, an ETF that tracks the overall stock market may own a good chunk of Apple stock, and a tech-focused ETF may own a lot of Apple stock as well. So it may not necessarily make sense to own both. Be sure to check the list of holdings for each ETF you own in order to avoid redundancy in your portfolio.

6. You Can't Trade It for Free

Many discount brokerage firms allow account holders to trade certain ETFs without paying a commission. For example, Fidelity allows fee-free trades for all ETFs offered by iShares. By eliminating this commission, you could save upward of $7 on every stock purchase, which is a lot of money if you make frequent purchases. This is particularly advantageous for younger investors who prefer to invest a little at a time rather than one large sum.

If you're looking at an ETF to buy but it's not available without paying a commission, consider switching to a similar ETF that is. If your broker does not offer commission-free trades on ETFs, maybe that's a good excuse to switch brokers.

7. It Doesn't Track an Index Very Well

Many ETFs are designed to track a specific benchmark index, such as the S&P 500 or Russell 2000. If they do what they are supposed to, your returns will be closely aligned with the performance of these indexes. But some ETFs do it better than others. It's easy to find an ETF's "tracking error," which measures the difference between an ETF's performance and the benchmark it's supposed to be tracking. Most ETFs will have a tracking error of less than a tenth of a percent.

"If you see a high tracking error, this could work out to an investor's benefit, but it may also be to their detriment," Halverson says.

8. It's Not Traded Very Heavily

The only way an ETF is sold is if there is a buyer. Likewise, you can't buy a stock if no one is selling. With most ETFs, it's easy to buy and sell because there is a large trading volume — meaning that there are plenty of buyers and plenty of sellers. And when there is a high volume, there is rarely a big spread between the "bid" and the "ask" prices. But what happens if an ETF has a low trading volume?

Halverson said this could mean that the ask and bid prices are far apart, and it may be hard to complete a sale at the price you want. Most investors, he said, will find it easier and better financially to trade ETFs that are more commonly traded.

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This article is from Tim Lemke of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Best Online Sites for Building Wealth

Shannah Game — Tue, 21 Jun 2016 09:31:25 +0000

Managing your money has never been easier with the influx of countless online sites to help you build wealth. In the past, your options were limited to either hiring a financial planner, or going at it on your own and hoping you were on track to reach your goals.

But now there are online companies for building wealth that offer many of the services that you would receive if you hired a financial planner for a fraction of the price. After all, everyone should have the opportunity to build wealth, not just those who already have a lot of zeros in their bank account.

Betterment

Based off your age and your income, Betterment helps you dial in your financial goals and create a solid plan around those goals. The three primary goals that Betterment helps you reach are Safety (with adequate emergency fund savings), Retirement (making sure you are on target to achieve your retirement goals), and Investing (growing and preserving your capital over time). Through the use of technology and automation, Betterment can offer very low fees to manage your money, starting at $4/month for investing balances under $20,000 and 0.25% annual fee for balances over $20,000. Most traditional investment advisers would charge fees upwards of 1% a year. Saving money in fees means that you get to put more money in your pocket, and achieve all of your awesome goals much sooner.

Empower

When was the last time you took a look at your net worth? If you're like most people, you've probably never taken the time to figure out your net worth and analyze your current and future financial road map. Empower offers an all-in-one wealth dashboard with robust financial tools to keep you informed and on track. On top of their net worth planner, Empower also provides tools to analyze your investment portfolio with their Investment Checkup as well as a retirement planner and wealth management (for a fee). Signing up is free, and you can access all your information on their mobile app or desktop version. One of their most popular tools is the Cash Flow Analyzer, which gives details about your weekly, monthly, and annual spending habits so you can dive deep into what you are spending on things like eating out, entertainment, and travel.

GoldBean

GoldBean believes that investing should be easy, fun, and approachable. Geared toward the beginner investor, GoldBean uses their technology to analyze your bank statements to find investment options based around the companies that you love. They believe that you should always invest in what you know — the companies that you already love and trust. Once they've analyzed your current spending, they create a customized portfolio, provide ongoing financial advice, and offer the ability to buy funds as your experience and confidence in investing grows. Annual membership starts at $50 a year, and trading fees are low at $4.95 per trade after two month's free trading.

Sprinklebit

Stock investing can be scary for anyone, but especially a beginner. There are so many choices, and it's hard to figure out what is best for your situation. Sprinklebit believes in demystifying stock investing by using the same principles of Facebook — social sharing — and the notion that you should never trade alone. When you sign up for Sprinklebit, you have access to all the other Sprinklebit customers and their portfolios to help you make better investing decisions. You can see which stocks are performing well and which ones are the losers before you put a dime of your money into the stock. Sprinklebit doesn't just stop there. They believe in education and have created 24 chapters of in-depth material to take you through all the different steps of investing for free.

You can also set up a mock portfolio with their Market Simulator and use $5,000 free "Sprinklebucks" to give a portfolio a test drive before you pony up any of your real money. With the market simulator, you have access to real-time trading data just like you would in a real portfolio. Once you get your confidence, you can move over into a live portfolio and begin trading. Each trade costs $8, and if you're more advanced, you can move up to their premium option which gives you some advanced trading tools.

Blooom

If you're one of those set-it-and-forget-it types who chose your 401K funds years ago and has never taken a second look, Blooom is going to become your best friend. Blooom was created as an easy and affordable way to fix and manage your 401K to meet your needs. Their promise is "No more pie charts, line graphs, or nausea," but simple, easy to understand knowledge, and tips about how to maximize your 401K funds. You can use their free analysis tool to find out if your 401K is positioned properly (many aren't), and then sign up and pay $10 per month, with additional accounts at $7.50 per month. (Save 10% by paying annually.) There are no other hidden fees, and you can cancel your membership at any time. Professional advisory would cost you a lot more if you turned to an individual broker for assistance. With Blooom, you don't need to be a finance whiz create a 401K portfolio that puts you ahead of the retirement game.

What's your favorite online company for building wealth?

This article is from Shannah Game of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Buying (and Trading) on Etsy

Maggie Wells — Mon, 26 May 2008 04:35:48 +0000

Positively one of my favorite places to shop online when I need a present is www.etsy.com. And I have to say, most of the time when I go to buy a present from this site, I have no idea beforehand what I'm actually going to buy. I just browse endlessly by random criteria. My favorite is by color. I want to see something blue and voila! Everything from buttons to yarn to pillows and barrettes in blue.

Etsy only lets vendors who are selling handmade items post their wares on Etsy. They are pretty strict about this. If a vendor even tries to post something not created , other shoppers and artisans will flag it immediately. When they say handmade they mean it---but there's such a broad interpretation of that. The t-shirts a friend of mine silk screens are on there, my old zines are on there, and restrung jewelry made with vintage beads are there too.

If you want to set up shop, etsy boasts some of the lowest cost fees around and the percentage cut is tiny. It doesn't have the traffic of eBay yet, but it doesn't have the high cost either and stuff can sit in your store for three months straight from one posting. A girlfriend of mine who dyes her own yarn has sold about $500 worth so far with not that much effort put into it. You can go in with a few artists in your area and have one store between you.

On the flip side, since artisans and artists make up this site and ususally can't help themselves when they see something fun, clever or beautiful, you can bet that other artists and artisans are looking around their fellow etsy sites. You can totally work out trades of merchandise and can post on your site that you are up for such things (there I go again with the trading). I traded a few books for some earrings.

This article is from Maggie Wells of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: