Wired investing

If you've got the time, the money and the inclination, online investing may be right for you -- but how do you decide?

The Chartered Accountants of Ontario say that many people have made the decision to go it alone online, mainly due to price and convenience.

"Online investing may not be right for those who know very little about investing, but it's not as difficult as many think," says Warren MacKenzie, a chartered accountant and president of Second Opinion Investor Services in Toronto.

"If you possess average investment knowledge and experience, have an investment strategy and discipline to follow it and are willing to accept responsibility for your personal financial security, then you should consider it," he says.

You must also be willing to put in the time and effort required to research and manage your investments.

MacKenzie says that online investors should have a "sensible, well-balanced portfolio."

"Your investments may perform poorly if you haven't done your research or taken a disciplined approach," he says.

Philip Maguire, who is also a chartered accountant and a principal of Glenidan Consultancy Ltd. in Toronto, says the cost is lower for online investing because "you tend to pay per transaction only, meaning you don't pay fees for investment advice."

"You can initiate trades when you want to, not when your broker or adviser is available," says Maguire. "You have greater control because you know where your money is invested and it's convenient, because all you need is access to a computer."

But MacKenzie warns that the low cost per transaction can translate into trouble if you're not careful.

"Low fees can encourage overtrading in an account and not all investment products are offered online," he says.

If you do invest online, the institute advises that you use a reputable broker -- all major banks and online brokerage houses offer online investing, and many websites and business publications provide information on online investing and brokers.

While you can handle most of your investing online, MacKenzie suggests moving your accounts over gradually.

"There can be some delays around transfers and you don't want your entire portfolio hanging in limbo," he says.

Another thing to look into is cost per transaction and whether or not you need a certain amount in your online account in order to get the best fee per transaction.

"It is wise to shop around," says Maguire. "Fees and services do vary significantly."

It's also wise to talk with a financial adviser such as an accountant before you make the move online -- not just to give yourself peace of mind, but also to ensure that you've got the time and knowledge you need before you make the switch.

"Online investing is an exciting option for investors who are keep to take charge of their financial affairs," says Maguire. "A CA can provide a wealth of advice in this area."