• Using an online broker can save you money.money, money, money image by easaab from Fotolia.com
  
  Investing online provides excellent convenience for busy investors, including the ability to make a trade any time of the day or night. But there are things investors need to be aware of when opening and using an online account. From security concerns to fees, understanding the ins and outs of online investing can make you a wiser, and a more successful, investor.
  
  

Protect Your Accounts

• Unauthorized access is very dangerous in an online investment account, so take steps to protect your identity and your account. Look for an online broker or mutual fund that provides strong encryption of your data, as well as protection from fraud and unauthorized access. The firm should ask you to set up challenge questions to confirm your identity if you forget your password. The firm's software should also be able to detect when you log in from a different computer, and provide those challenge questions again to prevent unauthorized access. This extra level of protection helps prevent thieves from gaining access to your account, even if they somehow get your user name and password.
  
  

Choose a Low-Cost Broker

• Choosing an online discount broker instead of a full service firm can save you a lot of money, but it is still important to shop around for the best deal. The rates charged by discount brokers vary, but some firms charge as little as $7 per trade. When evaluating trading costs be sure to read the fine print. Some online brokers charge a flat fee for all trades, while others use a tiered structure that varies with the number of shares bought or sold. Firms may also charge more for limit orders, option orders and other special trades, so check the costs carefully before you sign up.
  
  

Control Your Investment Costs

• Investment costs are critical to all investors, since over time those ongoing charges can really eat into your return. A study posted at the Motley Fool website found that some mutual funds charge as little as 0.18 percent per year in management fees, while others charge well over 1 percent. When opening an online account with a mutual fund company, it is always wise to review the plan prospectus for the expense ratios and other charges associated with the fund.
  
  

Link Your Bank Accounts

• One of the most convenient parts of online investing is the ability to move money between accounts quickly. The ability to move fast is important, especially when market conditions are changing rapidly. You can make moving money around a lot easier by linking your bank account to your online brokerage or mutual fund account. You can set up this linkage during the initial enrollment process, or you can go back later and add or change the bank account. If you set the bank account up at the start, you can use a direct bank transfer to fund your initial investment.