Getting Smart Online

A study by the Pew Internet & American Life Project (www.pewinternet.org/
reports.asp) shows that 63 percent of U.S. adults are now online, and many
of them — especially those with several years of online experience — have
built Internet use into their lives in practical ways. This research indicates
that if you start using the Internet to do your own investing, you won’t spend
a significantly longer time in front of your computer than other people do.

Connecting to the Internet gives you access to millions of documents, a vast
variety of software programs, and high-caliber information that in the not-toodistant
past only large financial institutions could access. The World Wide
Web provides an easy-to-use interface with which you can access the Internet’s
many financial resources. With your Web browser, you can acquire an education
in investing, frequently avoid costly financial services, and conduct highgrade
online research.

Online investor tutorials

If you’re serious about seeing your capital grow at the fastest rate possible,
you need to get smart about investing. The Internet provides many online
tutorials, courses, and feature articles that can bring you up to speed.

Avoiding information overload

When you’re just starting out on the Internet, you
can easily become overwhelmed by the huge
amount of business and financial information that’s
available. The best way to avoid this information
overload is to divide these sources into specific
categories. You can add these categories to your
browser’s bookmark file. (Netscape Communicator
calls them bookmarks. In Internet Explorer, they’re
known as favorites.) For example, this chapter provides
information for these bookmark categories:

1-clubs
2-Investment news and market commentary
3-Investment publications
4-Investment simulations
5-Investment tutorials and training

Bookmarks offer a convenient way to retrieve
Web pages. When you find a Web page that you
know you’ll want to revisit, add it to your Web
browser’s list of bookmarks (or favorites — both
terms mean the same thing). The next time you
want to visit that page, you don’t have to search
for it or remember the series of links you followed
to reach the page in the first place.
Instead, you can simply select the page from
your list of bookmarks, and voilà! You’re there.
Your Internet browser has menu commands and
icons that enable you to create and organize
your bookmarks. For more information about
bookmarks, refer to The Internet For Dummies,
10th Edition, by Levine, Baroudi, and Young
(Wiley Publishing, Inc.).

Traditional investment bankers and brokerages that are competing for your
investment dollar often sponsor these sites.

These Web sites are usually 80 percent content and 20 percent sales pitch. In
my opinion, the ratio makes them well worth the annoyance or inconvenience
of having to complete a free registration or read an advertising banner. Here
are a few examples of these informative sites:

About Investing for Beginners (beginnersinvest.about.com) is
designed to help investors understand why the stock market exists,
what makes a stock undervalued or overpriced, and what makes stock
prices change. This collection of short online tutorials covers most of
the basics and can be very helpful for beginning investors.
Investing Basics (www.aaii.com/invbas) contains feature articles from
the American Association of Individual Investors (AAII). Articles show
individuals how to start successful investment programs, pick winning
investments, evaluate their choices, and more. The articles cost nothing
with your free registration. However, higher levels of information require
your membership. Basic membership is $29 a year for 10 issues of
the AAII Journal, the Annual Guide to the Top Mutual Funds, Yearly Tax
Planning Guide, Local Chapter Access, AAII Research portfolios, Discount
Broker Survey, Guide to Dividend Reinvestment Plans, Guide to Investment
Web Sites, and other reports. Enhanced membership is $53 and includes
all the Basic membership benefits, plus six issues of the AAII Computerized
Investing newsletter, member access to the Computerized Investing “sitewithin-
a-site,” and a 300-page online guide to Computerized Investing. The
$349 lifetime membership includes both the Basic and Enhanced membership
benefits for life.
CNN/Money 101 (money.cnn.com/pf/101) is written by the editors of
Money magazine and includes 23 interactive courses on managing all
your finances. Each online tutorial takes about ten minutes. Lessons
include calculators, quizzes, and a library for supplemental materials for
online investors who want to dig deeper.
NASD Investor Education (www.nasd.com/stellent/idcplg?
IdcService=SS_GET_PAGE&nodeId=13&ssSourceNodeId=5), provided
by the National Association of Securities Dealers, offers educational
materials for investors. In the top margin is information about investor
alerts, investment choices, investing resources, investor protection,
markets and trading, online tools for research, simulation games, and so
on. The left margin shows top links for investors. The center of the page
shows what’s new for investors, provides quick links, and offers investment
tips. The third column includes information about how to check
your investment professional’s background and an NASD Knowledge
Quiz. The Knowledge Quiz includes 18 questions guaranteed to test your
investment smarts.

Web sites for new investors

You can find many investor news, finance, banking, and investment organizations
on the Internet. Competition is high, so companies are willing to give
away a large amount of high-quality information, downloadable software, and
online tools for free. These organizations hope that individual investors, like
you, will become fans of their great services. This way the online company
can become a well-known entity that can charge advertisers for banner ads
or require financial institutions to pay high fees for using their services.

To see a few examples of investment sites for new investors, check out the
following Web pages:

MSN Money (moneycentral.msn.com/investor/research/wizards/
SRW.asp), shown in Figure 2-1, shows you how to research a stock.
Discover how to determine whether a company is financially sound, how
much investors are willing to pay for the stock today, how much investors
are likely to pay for the stock in the future, and how the stock compares to
the industry.
SmartMoney University (university.smartmoney.com) is a great
starting place if you’re a beginning investor or if you want to look up a
specific investing concept. Here, you discover the basics of investing
theory, are introduced to the concept of risk management, and get familiar
with the major asset categories.