How Has the Internet Changed Investing?

One of the main ways that the internet has changed investing is by making easier for the “little guy”.  With the advent of computer-based trading software, a small-time investor can actually complete a small trade before the large institutional traders can buy or sell their huge blocks of shares.

Another important change that we’ve seen in the last decade is the huge drop in commission charges.   In the 1990′s, brokerage fees of 2 to 3% could mean that 100 shares of a $50 stock, or a $5,000 equity purchase would be charged a commission between $200 and $300.  The stock would need to increase noticeably just to sell it back at cost!  Today, you can trade stocks through online brokers for just a flat rate of $5 per trade.  This means that the same 100 shares of a $50 stock would only be charged a 0.1% commission fee.

Some well-known brokers like Fidelity still charge higher fees ($10 to $20 per trade) but this is still much cheaper than what they charged in the past.  Popular discount brokers include ThinkOrSwim and TradeKing.  Their low flat fees are helping to drive down costs for everyone!