The internet is one of those once in a lifetime inventions affecting everyone to a greater or lesser degree. Over the past 20 years, it has had such a fundamental impact that even those who have never used it will nevertheless have had their lives altered by the mere fact of its existence. Whether it’s the manner in which their family doctor keeps their medical records, how they book their holidays, the way salaries are paid into their bank accounts, how they communicate, listen to music or watch movies, the internet has changed everything.
In the world of commerce the internet has made it possible for even the smallest, one person enterprise to create a global presence, complete with online transaction processing, within a matter of hours, thanks to off the shelf websites that can be customised to suit virtually any type of business. No matter whether the purchaser uses yen, rupees, euros or yuans, banks can transfer it into the supplier’s local currency instantly.
One of the business sectors to be radically changed forever is investment, which has been opened up to a whole new segment of the populace that would previously never have considered dealing in stocks and bonds. Before the internet, anyone wishing to learn about the world of investment would have been obliged to go to his or her local library to find books on the subject. Once having gained an insight into how to go about investing, they would then need to scour the financial press over an extended period in order to identify viable stocks, mutual funds and bonds. Even more time consuming and expensive, the only way of accessing a company’s financial reports was to order a copy, which would then have to be printed and sent through the post. Perhaps most importantly, prior to the introduction of online brokers it was financially impossible for individuals with limited funds to participate in the markets because the deposits required to open an account were beyond their reach
Today, investors only have to go online and view or download financial reports from any company from the Securities and Exchange Commission or from the company itself. There are also dozens of reputable websites set up by companies employing experts who specialise in offering a wide spectrum of financial services. As an example, anyone interested in checking out start-ups might log on to the Crunchbase website, where they will find information on various financial companies like Fisher Investments. Crunchbase was founded by Mike Arrington in 2007 as a crowd-sourced database and currently maintains details of over 650,000 companies and individuals involved in start-ups.
The internet has also slashed the cost of investing, as online investment managers and brokers have been forced to cut their fees in order to remain competitive. As a result, the majority of online companies will allow investors to open accounts with no minimum or very low deposits, and the commission charged per trade is frequently under $10 (approx. £6). Once an account is opened, the investor is given access to a trading platform, which enables them to buy and sell stocks, mutual funds and bonds at their leisure. They are also able to utilise a comprehensive range of tools, view analyst reports and monitor securities, indices and portfolios. Most trading platforms feature virtual accounts, which enable novice investors to hone their skills without risking real money. Even experienced traders use this feature to test out new strategies. There are a number of good platforms to check out for index funds uk investing.
With the introduction of smartphones and tablet computers, investing has become even easier, no matter where the trader is located. He or she could be checking their portfolio or purchasing bonds while on a train, sitting on a park bench or in the departure lounge of an airport – literally anywhere. In order to satisfy the burgeoning demands of mobile users, apps have started to appear, some of which cater for niche sectors of the market. For example, investors who have only limited spare cash available can use an app that monitors their monthly income and expenditure, takes any surplus funds and invests it in a portfolio of index funds on their behalf. Another not only manages, optimises and tracks existing portfolios; it also allows the investor to manage their portfolio manually. When first registering, the individual sets out a personal investment plan, completes a questionnaire to identify their level of risk aversion and the app does the rest. Full details of the account are displayed on a personal ‘dashboard’ and all holdings are displayed in real time.
Though investing has never been more accessible to the masses, experts in the industry believe this is only the beginning. An analogy has been made comparing the current state of technology, and what lies just around the corner, with the effect the invention of transistors had on the sale of valve radios in the 1950s. In other words, the revolution has barely begun.