Choosing & Maintaining Your Brokerage Accounts

The craze of online trading seems to have lulled itself to sleep. A lot of people lost a lot of money while others made money handling their own brokerage accounts. Trading stocks is not as easy as one would think. It's more than luck to make money on stocks, it takes skill and knowledge.

• Learning to Evaluate Stock Market Risks
  The first thing that you should keep in mind is that the stock market isn't a tool for instant success. Yes, you can get wealthy playing the market, but that often takes a diverse portfolio, a lot of work, and years of time. It's true that a lot of people get rich off of sudden "hot" stocks, such as the "dot-com" boom of the 90's, but once the initial swell ends the stocks tend to crash...

Before choosing which stock you're going to buy, you need to do your homework. This means you need to research the history of the company as well as their stock history. Look at the high/low trends of the market. If a company has had a lot of lows and very few highs, then go on to another company.

• Investment Guide in Startup Companies
  Startup companies are usually small companies and usually new companies. They are unproven, frequently having little money and less market share. Often they are started on a shoestring and a dream, a song and a prayer--but you want to find them before they become a household name.

If the company is new and their product is cutting edge, look to see who is on the Board of Directors and their business history. If they're known to have poor management tactics, walk away from that company no matter how promising the product looks. For example: My former husband wanted to buy stock in some ophthalmologic equipment. He thought the stock would take off and $8.00 a share was a very good buy. He asked my opinion and my gut level told me not to do this. Why? Because he hadn't done his homework. I looked into the Board of Directors and told him my misgivings. He bought the stock any way. Within six months, the company declared bankruptcy and their stock was pulled off the market. My former husband lost $800 because the stock needed to be purchased in 100 stock options increments.

On the other hand, Apple Computer's stock had been very low for years. My former husband bought this stock and within three months, the stock prices went up. Within one year, I couldn't keep track of how many times the stock split. Apple Computer defied the odds of their low term history of low return on their stock. Just because this company did, doesn't mean that other companies will so you need to keep that in mind.

Now that you've done your research and have purchased your stock, you need to maintain your brokerage account. The best way to do this is to take the advice of the stock brokers, once your stock has doubled sell your stock. While there are a lot of people who have made a very good living off the stock market, there are others that have lost everything because they didn't sell when they were advised to or who purchased stocks that weren't a good choice from the beginning. There are people who have sold their stock once it had doubled only to lose out on a higher dividend. What you need to remember is to err on the side of caution because how do you know that if you hadn't sold when you did, that the stock price would have gone through the floor and you would have lost more money than you had invested?

It's best to sell your stock once it has doubled and take part of the earnings and put it in a money market or a long-term CD; then you take the other portion and reinvest into another company. Remember the stock market isn't the only way to get a return on your money. Remember to have other venues for residual income so you can make the most of the proceeds from your brokerage account.

If this seems like a lot of work to you and don't have time to handle this, the best route to go is through T. Rowe Price and Associates. Their brokers work for a salary and will do the best possible job for you. Other brokers work strictly on commission and tend to watch their high end investor accounts more than the low end. With T. Rowe

Price brokers, they treat everyone equally.

If you think that you're ready to go this alone, remember to do your research before you part with your money.