Investing is one of the most well-known financial related activities. Absolutely anyone can get involved in financial investing, and the advent of the Internet has actually made it much easier for people to do so. The ease of use is an obvious advantage of online investing and research, and there are many other advantages as well. It’s important to note, however, that there are also some definite risks involved in this activity. You should take all the possibilities into account to fully understand the actual risk you face from online investing.
Advantages of Online Investing
There are numerous advantages to online investing, but the following are some of the most beneficial.
1. Real-time Stock Updates and News
One of the greatest things about investing online is the fact that a person can use programs, stock information websites, and even smartphone apps to get live information pertaining to their stocks. When a person chooses to invest in the stock market, this information can be the difference between making and losing thousands of dollars.
2. Speed of Investment
Another great benefit of online investment is the speed at which a person can operate. Individuals can make any type of business deal online with only the click of a button. This allows for quick action, and in the investment world, the ability to react quickly is absolutely fundamental.
There are also some distinct disadvantages related to online investing, and the following can actually prove detrimental.
1. Lack of Support
One of the largest disadvantages related to online investing is the lack of support a person has when participating in the activity. There are always going to be websites that offer “professional advice,” but this really doesn’t constitute a beneficial relationship between an individual and an investment professional. This lack of human interaction ensures that a person has no one to share ideas with or get opinions from.
2. Stock Fraud Hazards
Another huge flaw with online investing is the chance of encountering stock frauds. There are numerous frauds out there, and some are surprisingly simplistic to carry out. In September of 2000, for instance, a 15-year-old boy was fined for carrying out an illegal “pump-and-dump” scam.
A pump-and-dump con occurs when a person posts false information and undertakes other fraudulent activities in an effort to get people to purchase a certain, usually worthless, stock. That person then sells all of his or her shares once this valueless stock has unnaturally inflated. Once the “pumping” ceases from the criminal, the stock will usually return to its former low price.
There are other fraudulent stock activities that can be perpetrated against unsuspecting victims via the Internet. Online stock trading makes unsuspecting customers more likely to fall for “chop stock” investments where companies sell certain stocks for much higher than they’re valued in an effort to turn a substantial profit for the person selling them at the expense of naive customers. In worst case scenarios, a stock fraud attorney may even need to get involved.
Online investing has made it much easier for the common person to get involved in financial investing. This is a great thing for the economy in general, but it’s imperative for a person to recognize the risks involved in this type of activity. It’s not that the Internet isn’t a safe place for investing; it’s just the fact that if a person doesn’t take proper safety measures, they could be scammed. As long as you follow appropriate investing practices, you should be relatively safe online.