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Online Stock Brokers – Are They Good Investments?

Online Stock Brokers – Are They Good Investments?

The dot-com boom and bust could have never taken place without the emergence of online brokers. First, there was E-Trade (ET), which was quickly followed by rival Ameritrade (AMTD). Then, veteran discounter Charles Schwab (SCHW) joined the field of online stock brokers.

Several other companies came and went during the boom and bust, and the stock prices of these online brokers have been volatile, but historically, the online stock brokers have been good investments in their own right.

E-Trade – Godfather of Online Stock Brokers

E-Trade was the first of the online brokers. It went public in August of 1996 at a split-adjusted price of .81 per share. E-Trade stock now trades around per share, so any lucky investor with ,500 in extra money and the foresight to see how big online brokers would become back in ’96 would now have close to ,000 to show for his hunch.

Then again, if he would have sold out in 1999 when the stock hit its all-time high, he would have pocketed nearly three times as much.

Today, E-Trade is probably not a good buy. Intense competition among the online stock brokers have driven down the price of trades – that’s great for E-Trade’s customers, just not its own investors.

In an attempt to cut down on the competition, E-Trade tried to take over other online brokers in 2005, but failed when in a defensive move, online stock brokers Ameritrade and TD Waterhouse combined to form TD Ameritrade.

TD Ameritrade – Two Online Stock Brokers In One

Ameritrade was the second entrant in the field of online brokers when it went public in March of 1997 at .25 per share. Don’t you wish you would have picked up 1000 shares back then? If you did, you’d now be sitting on a cool ,000 and change.

Like most other online brokers, Ameritrade’s stock has been very volatile. In less than six months in 1999, it shot up from single digits to around per share. Then it began a long, painful slide for two and a half years, all the way back down to , before making four year a climb back to its current level of respectability.

The biggest news for Ameritrade came in 2005 when it purchased TD Waterhouse. The two online stock brokers formed a single company, now known as TD Ameritrade.

Charles Schwab – The Great Grand-Daddy of Online Stock Brokers

Charles Schwab has always been an innovative person and company. Schwab was the first discount brokerage firm of note in the U.S.; providing an avenue for investors to trade stocks without all the bells and whistles or the extra fees that come with them. Thus, it was only natural that this pioneering company would quickly join the ranks of online brokers.

Because Schwab’s business is more diversified than the other online stock brokers, its stock has not been as volatile. In fact, SCHW is currently trading near its five-year high, something shareholders of the other online brokers could only dream of.

Going into the future, this model of diversification is likely to lead to further growth, as Schwab just recently applied for and received a bank charter, which will allow it to do banking business for its clients.

Options Xpress – The New Kid on the Block

Options Xpress (OXPS) went public in January of 2005 at .09 per share. The stock quickly plummeted by 35 percent before staging a major bull run all the way to .94. As the youngest of the online stock brokers, Options Xpress probably has the most room for growth.

Furthermore, since the industry has been seeing its share of mergers and acquisitions, there is a good possibility that a larger company, such as E-Trade, may launch a takeover bid for Options Xpress. When this happens, share prices almost always go up.

Options Xpress did see its share price decline significantly in June of 2006, and as a smaller, newer company, it may be the riskiest of the online brokers.

Before acting on any investments discussed in this article, be sure to talk to your investment advisor.

William Smith the author provides much more financial information on many subjects as well as the secret to his success in the market along with 5 Free power stock picks emailed daily so grab your Free subscription on his website at Online Stock Brokers (All is Free)

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Choosing The Best Fdic Insured High Interest Saving Account With Good Yields – Ing, Everbank, Etrade And Ally

Choosing The Best Fdic Insured High Interest Saving Account With Good Yields – Ing, Everbank, Etrade And Ally

Updated With savings rates (APY) falling due to sharp cuts in the federal fund rates – nearing 0% – it is getting harder and harder for people to earn a decent risk-free return on cash sitting in savings accounts. According to Bankrate.com, the average savings account rate has fallen below 0.25%. What’s more, many of those once high flying internet only banks offering 8%+ APY’s have gone broke, leaving only handful of banks providing above average rates. When it comes to choosing a good high interest savings account, the first thing you must make sure is that it is FDIC insured (0,000 limit for saving accounts), charges no account keeping fees and is well capitalized/established. If the savings account meet’s these mandatory criteria, the next key factors to look at are the savings rate (APY), user experience/interface and finally convenience (which includes good customer service). With all these criteria in mind, here are my top recommended high interest rate accounts:

ING Direct has a very simple and easy to use interface, which along with its strong brand makes it amongst the most popular accounts in the market place. The new electric orange account combines their competitive APY offering along with checking and ATM features that put in direct competition with the established banks, that offer little or no interest on their checking accounts. If you want a steady and simple high interest account, then ING Direct is the one for you.

Everbank pays out higher-than-average interest rates on most of it’s savings accounts and pledges to be amongst the top 5% of all providers (which is clearly demonstrated be their recent rates). The minimum opening deposit is ,500, but after that there’s no minimum balance. A bonus for new accounts provides a special interest rate on checking for the first year, and a competitive yield on their IRA, CD and money-market savings accounts.

Ally Bank (formerly GMAC Bank) is a relatively new player in the high interest savings account space, and is providing some strong competition to the market leaders like ING Direct and HSBC Direct. There offering is quite standard relative to the leading providers but the feature I liked best was that they calculate and compound interest daily, rather than monthly or quarterly like some other big banks. The more often interest is compounded, the faster it grows. They also have the leading Certificate of Deposit (CD) offering which is good for longer term savers that like to use laddering.

ETRADE, not only offers a very competitive brokerage service, but also a top notch savings account with a straight forward multi-function user interface. Having a combined savings, brokerage and IRA account also make things very easy to manage from an administrative standpoint. This savings account is great for those who want a one-stop shop for all their financial activities.

Conclusion: I currently have my cash and emergency savings across a number of accounts, with the above being the ones I like best. With saving interest rates falling rapidly, seeking out the best yield is something I am constantly doing to maximize my returns. As rates (APY’s) change and better offers come up, I will update this post and you can keep up by subscribing via Email or RSS to get the latest articles delivered direct.

www.savingtoinvest.com

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Is this a good time to invest? How should I invest?

Is this a good time to invest? How should I invest?

The thing there is no right or wrong time to invest in market. Your investment decision should depend on the price of stock and strength of the stock. There is no exact definition for right stock. . Investing in companies whose stock prices are currently undervalued but the company has good growth potential in future would be called as investing in undervalued stocks and generally advisable.

Following are couple of ratios to find undervalued stocks but to take decisions for investment further analysis is important and these ratios don’t provide all information.

Low Price to Earnings (PE) ratio

PE ratio is one of the most important ratio on which most of the traders and investors keep watch. The PE ratio tells you whether the stock’s price is high or low relative to its earnings. The high P/E suggests that investors are expecting higher earnings growth in the future compared to companies with a lower P/E. but, the P/E ratio doesn’t tell us the whole story of the company. It’s more useful to compare the P/E ratios of one company to other companies in the same sector/industry and not in different sectors. PE ratio of less then 10 is generally considered as undervalued provided it has future growth potential. And in some scenarios PE of 10 to 15 can also be considered provided the company has high growth performance in past and expecting same in future. Generally stocks bought below 10 and kept invested for long term given more great returns.

Low Price to Book Value (PB)-

Basically PB ratio is mostly utilized by value investors to find real wealth when the stocks are at their lower prices. So investing in stocks having low PB ratio is to identify potential candidates for future growth. A lower P/B ratio could mean that the stock is undervalued. Book value – It is the total value of the company’s assets that share holders would receive if a company closed down. Like the PE, the lower the PB, the better the value of the stock for future growth. Some of the investors become quite wealthy by holding stocks for the long term of such companies whose growth is based on their businesses instead of market. If the stock’s price to book value is below 1 then it is considered as undervalued.

Earning Per share –

EPS shows how the company is profitable and growing. EPS of a company should keep increasing year after year. So the conclusion is to have a look for the past 4 to 5 years EPS and check the consistent incremental growth in the ratio.

Above three are most widely used ratios but decision based on only above is not advisable.

Experts also suggest opening multiple accounts because different accounts offer different kinds of specials. For example TradeMonster rates for Options Trading is exceptional, on the other hand TradeKing offers one of the cheapest rates for Stocks trading. Incidentally both of them have specials going on currently for new accounts. For more details on how to select a brokerage firm for your needs, check out Finding The Best Online Discount Stock Brokers

CompareBroker.com aims at helping Traders (Stocks, Equities, Options, IRA, Mutual Funds) to make smart investing decision in stock market. We partner with different online stock brokers and bring out their value proposition to consumers for a fair comparison.

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