Advice for Retirees Thinking of Trying Their Hand at Online Trading

Written by Kim Dawkins

If you do an internet search for online brokers, the number of search results returned is staggering. Choosing the best broker from those many options can be a daunting task. In order to separate reputable brokers from those with shady dealings, and strong ones from the weak, we have a series of steps to follow. Read on to learn more.

What To Watch Out For

1. Cost

The first on the list of important considerations is cost. The bottom line is high fees and commissions can lead to decreased returns. Keep in mind that different online brokers charge different fees for trading options, bonds, CDs, mutual funds and other financial markets. When trading mutual funds and ETFs, take into account the expense ratio. And watch out for the possibility of account service fees, maintenance fees, inactivity fees and other similar costs.

2. Research and Education Tools

Beginner investors can benefit from research and education tools provided by online brokers. These resources comprise a wide range of tutorials, reports, and other information. They help to make informed decisions about online trading and investment. There are several online investment companies out there like CMC Markets that provide in-depth research and education tools.

3. Customer Service

What if you need assistance in placing trades? What happens if there is a problem with the trading platform after placing your order? What if you have other questions? Quality, timely customer service is important when you have issues you need addressed. Online brokers with good customer service can be important in your online trading endeavors.

How To Pick A Good Online Broker

Picking the right online broker comes down to your preferences and priorities. Some online investors are willing to pay higher fees and commissions for a state-of-the-art platform while other take cost as the determining factor. Here are some areas to consider when picking your online broker:

1. Pay attention to account minimums.

The amount you want to invest in various financial markets may slim down your choices. A good online broker allows you to open an account with an amount you are comfortable with. Don’t get pressured into investing more than you are able and willing to.

2. Choose brokers with lower fees.

You won’t be able to avoid account fees completely, but with some careful research you can minimize them. Many online brokers charge a fee for closing your account or transferring out funds. If you are transferring funds to another broker, you may consider companies that reimburse some transfer fees.

3. Consider your trading style and technology needs.

Choose online brokers that offer the investment opportunities you want at the most reasonable price. If you are a beginner online trader, you may not plan to trade frequently. If this is the case, choose online brokers that don’t charge inactivity fees. Consider companies that offer technological tools to help make your online trading endeavors easier.

4. Look at ratings and customer service.

Take a close look at the ratings and customer service if you want to pick a good online broker. There are several review sites that offer comprehensive broker ratings that are objective and based on factors that matter most to consumers. These factors include, but are not limited to customer service, commissions, account minimums and fees.

Online Trading Scams

1. Hacking into your trading accounts

There are scammers out there with knowledge and technology to hack into your trading accounts by stealing your username and password. Once they have control of your account, they pretend to be you, able to make trades without your knowledge and generate huge profit for themselves. Secure password selection and management is something we all need to adopt as a part of doing business on line.

2. Email hacking

Some scammers may steal your email passwords which they use to access your email. Once they have access to your compromised email account, they might communicate with your broker to create a fake story to show why you need funds released.

How To Avoid Being Scammed

• Ensure your anti-spyware and anti-virus software are up-to-date.

• Use secure passwords that are difficult to guess, ones comprised of a mix of characters, numbers and symbols..

• Avoid using public computers or public Wi-Fi to log in to your accounts.

• Avoid public domain email address when you want to communicate trading instructions.

• Never save log-in details online or disclose them to anyone including your broker.

• Always monitor your online brokerage account.

• Regularly check trade confirmations provided by your online brokerage firm.


Forced To Retire

Although we would like to think the decision when to retire is up to our individual preference, not everyone has control over when they will transition into their second act. There are forces at work that can impact the arrival date for better or worse. You may have to stick with a job longer than you hoped because you have not yet accumulated sufficient savings to meet the financial requirements of retirement. Instead of winding down a lifelong career and shifting gears to begin your new role doing what you want you may have to stay at the grind a while longer – sometimes a lot longer.

But at least you still have your job. With some extra effort and commitment you can hope to tough it out. There are others who would gladly continue in their current job role, challenging though it may be, but do not have the option. For various reasons they find themselves forced to retire before they would like, ahead of plan, and sometimes before they ready to make the move.

A reader of mine shared her fear of what the future holds when she was forced to retire at age 58 due to her inability to continue with the physical demands of her position. She had been at the same company for more than 30 years but was not ready to retire. She had hoped to put aside additional savings while she had a full time job so she could enjoy the retired life she envisioned. Forced to retire ahead of schedule she was unsure what to do next.

Older employees are often more costly to maintain than their younger counterparts. Health insurance rates for workers over 50 can seem burdensome to small companies. Many who have worked on the same job for decades have risen through the ranks or graduated into higher pay grades. Those higher salary requirements can be reduced by bringing in new people who start at the bottom. Though the skill level may not be there at first, younger employees have the additional attractiveness of likely being with the company for a longer period of time. Sometimes it just seems to make sense to go with someone younger.

Back in 2011 I joined a small start-up made up of twenty gung ho gonna-make-it-happen believers. Everyone was happy to work hard, always holding onto the dream of what could be. We were growing at a nice pace when a bigger company (8000 employees worth) purchased us. As is often the case with acquisitions various parts of our little start-up did not fit in with the corporate structure including my team. So at the age of 53 I found myself back on the streets looking for my next gig in a very difficult economy.

After six months of intense interviewing for numerous positions I came to the disheartening realization I was too old to do what I had been doing successfully for 30 years. Nothing had changed in my skill set – I was just getting older. At almost all of the companies I interviewed upper management was younger than me, many significantly younger. Apparently an “older guy” running a young aggressive sales team was not what they were looking for. I began to seriously wonder if I would ever find another job.

As more months crawled by reality began to sink in – my retirement days were effectively under way. All of our plans for the future included me working until 65 or at the very least 62. If I never worked full time again it would seriously impact our finances. But the writing was on the wall. Like many others shuffled out of the mainstream before their time I found myself among the ranks of the retired well before I planned.

Fortunately in that my wife was able to continue working until her retirement last year. Because of her efforts we had health insurance and were able to add to our savings for five more years. But it would have been nice to have included my contribution as well. And it would have been nice to be the one to decide when I retired. But what is nice is not always reality.

We are lucky. We should be able to get by based on savings and social security and living within our means. Not everyone is so fortunate. More and more workers nearing retirement find themselves out of a job at a time when they can ill afford it. According to Jamie Hopkins, associate director of the New York Life Center for Retirement Income, about 45 percent of people retire earlier than they planned. The best laid plans can dissolve into wishful thinking if you are not given time to sufficiently fund your fun. It is scary but it is a reality many planning to retire are forced to face.