A Word on On-line Investing

Computer Technology is changing the way consumers do business today. We can research on-line, shop on-line, pay bills on-line and now, invest on-line. Consumers feel that their ability to manage their personal affairs in this manner gives them certain freedom perhaps from a time management perspective and also freedom from having to rely on professionals such as sales associates, customer service representatives or financial consultants.

With this freedom comes an increasing responsibility on the consumer to ensure that they are well informed. On-line investing is no exception to this. Arthur Levitt, Chairman of the Securities Exchange Commission, the securities regulatory body in the United States, makes the distinction that "On-line trading may be quick and easy; on-line investing --and I emphasize investing -- requires the same old fashioned elbow grease like researching a company or making the time to appreciate the level of risk."

There is more to investing on-line than pointing and clicking your mouse. An investor must know what they are buying, know the ground rules under which they are buying and selling stock or bonds and they should also know the level of risk that they are undertaking.

Investors must also understand that they are not directly linked to the market and that the click of your mouse does not instantly execute the trade. Trades can take anywhere from minutes to hours to be executed.

The following tips are intended to provide the on-line investor with information to help guide them as they make their way through the on-line investment maze:

1.  Ask the broker prior to opening an account, about the alternatives for entering orders (such as over the telephone) and how to obtain account information if you cannot access the firm's web site.

2.  Ask the broker to substantiate any advertised claims concerning the ease and speed of online trading.

3.  Ask the broker about any previous significant web site outages, delays and other interruptions to securities trading and account access and what has been done to correct the problem. There are no legal requirements that trades be completed within a certain time.

4.  Before you open an account, you should learn about how to place orders and the types of orders you can enter. A Market Order is an order to buy and sell a specified number of shares (or bonds etc.) at the best available price. All orders not bearing a specific price are usually considered at the market which could mean paying the offer (when buying) or accepting the bid (when selling) A Limit Order is an order whereby a customer specifies a price that the order can be executed only if the market reaches or betters that price. It is a conditional trading order designed to avoid the danger of adverse unexpected price changes. A Stop Loss order is an order that designates a price limit. Using limit and stop loss orders is one way of managing risk. If you don't specify the type of order, your order may be treated as a market order.

5.  Know whether you are receiving delayed or real-time stock quotes and when your account information was last updated.

6.  Review the Broker's privacy and web site security policies and whether your name may be used for mailing lists or other promotional activities by the firm or any other party.

7.  Ask about sales commissions and fees and conditions that apply to any advertised discount on commissions before you open your account.

8.  Before you open your account find out how to contact a customer service representative. If you ever have concerns about your account, do contact a customer service representative and request prompt attention and fair consideration.

9.  Contact The Manitoba Securities Commission to verify the registration status and disciplinary history of the on-line brokerage firm.

10.  If you place an order don't assume it didn't go through if you don't receive a confirmation right away. Sometimes trades take hours to execute.

11. Know your options for placing a trade if you are unable to access your account on-line.

12.  If you purchase a security in a cash account, you must pay for it before you sell it.

13.  If you trade on margin, your broker can sell your securities to meet margin requirements without first giving you a margin call.

If you have questions or require clarification on any of the tips from the above list, contact Ainsley Cunningham at (204) 945- 4733 or toll free in Manitoba only at 1-800-655-5244.