You get what you pay for:
Online trading can save
you bucks, but online advice
could cost you
 Many
online investment message boards rank mutual funds and other investment
vehicles but...beware. The advice is, many times, more amateur opinion than
professional advice. Investors are strongly urged to make certain that the
information they gather from the world wide web falls into the latter category.
This warning results from a survey of hundreds of online investment sites
conducted by D. B. Root & Company, one of the nation's fastest growing,
independent financial advisory firms.
"Using
online services for trading can be
very economical and worth investigating. However, seeking advice online
is a different story," states Carrie Coghill, senior vice president
of the firm. "The complaints we hear stem largely from unfulfilled
expectations. Investors are drawn to the low transaction fees of online
trading but are disappointed by the lack of dependable advice available.
It is best to know how and why you are using online services prior to using
them," she said.
She
suggests three questions to ask before
you venture into online investing: 1) What are my investment goals?
2) How good am I at researching investment options? And 3)
How comfortable am I with computer technology?
"The
abundance of information on the Internet tempts a lot of people to surf
and visit chat rooms and message boards for investment ideas. And the ease
and low cost of online trading has attracted an enormous number of individuals
to this method of buying and selling stocks. I would just caution that when
it comes to your portfolio, you don't want to put yourself at extreme risk.
There is more to consider than convenience and cost," she advised.
The
good news is that as a source of such
vast amounts of data, the Internet can be extremely helpful in gathering
information on virtually any investment. The bad news is that deciphering
Internet-sourced fact from opinion can be very challenging.
"If you know how and where to
look for information online, and then know how to validate it with research,
I would say, `Go for it!'," Mrs. Coghill continued. "But, if you
tend to ask for investment advice, and like the comfort of a professional's
opinion, again, I would urge caution," she concluded.
Editor's
Note: D. B. Root & Company
is an independent financial advisory firm serving high net-worth individuals.
The company is also creating a national service standard for fee-based investment management to the retail investor.
D. B. Root is headquartered in the Koppers Building in Pittsburgh, PA, and
can be reached by calling (412) 227-2800, by
fax at (412) 228-2805 or by e-mail at l.nassif@dbroot.com.
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