Online investing can be a daunting prospect. With all of the information, brokers, and opportunities available, new investors can easily get off track and into dangerous waters. With the proper research and savvy, though, online investing can be profitable and uncomplicated.

One of the first considerations whenever you're investing through a broker is commissions. Stockbrokers charge commissions that span the spectrum, from relatively cheap ($5) to undeniably expensive ($50+). Before you decide on a broker, you should be familiar with their trading expenses. Especially if you're investing modest amounts, you need to chose a broker with low commissions; i.e., under $20. Otherwise large commissions could tear into your profit margin and make your investments effectively meaningless.

Fees are also a primary factor when deciding with which online brokerage you're going to trade. Many online trading companies charge maintenance fees and require minimum account balances. Watch out for companies that charge anywhere up to $75-$80 per year just to maintain an account. Those fees are unnecessary, in my opinion, and can really jump up and bite you. On the other hand, several companies have it right and charge no maintenance fees. Especially if you are new to the stock trade, a company with low or no maintenance fees should be your target.

Just like most banks, online investment firms often require minimum account balances. If your account dips below that minimum, which is a completely arbitrary number, the brokerage can charge overdraft fees. Those fees are even more arbitrary and sometimes completely ridiculous. For example, if you have a minimum balance requirement of $50 and you accidentally dip down to $48 dollars, some firms won't hesitate to slap a $40 fine on you. That's a $40 fine for a $2 discrepancy. Now your account is down to $8. And if you don't bump that balance back up pretty soon, they may charge you again until you do. As aforementioned, be wary of this issue, because it too can cannibalize your profits.

In simple terms, larger brokerages usually charge higher fees than smaller brokerages. These companies justify the added expense because they offer more sophisticated research tools. As an investor, you really have to decide whether these tools are worth it. Many novice investors find these tools invaluable. Other investors, and in my experience most investors, rarely or never use these tools. Most investors don't have the time to dive into vast oceans of research when trading online. In fact, many investors decide to trade online rather than offline primarily because of the speed and convenience online trading offers. Additionally, several free research tools do exist on the internet and are easy to find through a Google search.

Knowledge is obviously the most valuable commodity an investor has. Before launching off into the world of online trading, be sure to do your research. Shop around to several investment companies and brokers. Look for one that suits your needs and tailors to your interests. With the proper preparation and motivation, online investing is an excellent vehicle for wealth accumulation.

Taft Coventry is an Associate Partner at http://www.MadisonandMonroe.org: the most trusted guide to online moneymaking.

Visit http://www.MadisonandMonroe.org for more online money making information, products, and reviews.