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Saturday, September 4, 2010

Investing In The Stock Market Is Not Just For The Rich Anymore

Investing in the stock market has always been regarded as one of the best ways to build wealth over the long term. Over periods of over 20 years, no asset class has outperformed stocks in the history of US stock markets. Between 1926 and 2010, stocks (as represented by the S&P 500 index returned an average of 9.8% per year. The next best asset class over that timeperiod was long-term bonds, which produced an average annual return of just 5.4%.

But investing in the stock market is daunting for beginners with small amounts of capital because of the commissions involved. Commissions eat into your investments and profits, and can make winning trades losers, and losing trades even bigger losers! So, in the past, stock investing has been popular among the already-rich, enabling them to become richer, while the less well-off have not been able to take advantage of the growth opportunities in the stock market, and have thus remained less well-off.

A good, low-cost brokerage firm like Firstrade can help one overcome this entry barrier with low commission rates and absolutely no minimum investment requirement. Firstrade is an online broker that allows you to open several different types of accounts, depending on your needs. You can open general investment accounts, IRA accounts, business accounts and education planning accounts among others. Online trading with a Firstrade account costs only $6.95 per stock trade making it very affordable for small investors to get into the stock market. Their low commission rates apply to all investors, not just to those who qualify for them by being active investors with lots of commission-generating transactions. Moreover, they don't charge any inactivity fees, so even if you make no transactions in your account, you won't be charged any money to maintain your account.

Once you open an account with Firstrade, you can do trade online using a computer, talk to a broker to execute trades or do mobile trading with a web-enabled mobile device such as a smart phone. Firstrade offers a wide variety of investment choices to choose from. Whether you are into mutual funds, bonds, options or just plain stock trading, Firstrade also provides free dividend reinvestment so, if you invest in dividend-yielding stocks, you can have the dividends invested in additional shares of the stock instead of being made available to you as cash. This gives your money even more growth opportunities.

What matters more is not how you make and monitor your investments, but that you are actually investing at all. Whether you talk to your broker over the phone, invest over the internet, or take advantage of mobile trading, the final outcome is what really matters. Investing in the stock market can be very rewarding, and the sooner you get into it, the greater the rewards. Remember that at a 10% annual growth rate, compounded year after year, your money doubles every 7 to 8 years. The sooner you get the clock ticking, the sooner you will see your money grow. The key to wealth is not explosive growth in a short period of time, but steady growth over the long term. Good luck, and happy investing!

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