Comparing online brokerages

Online brokerage accounts have made stock trading and investing accessible to more people.

When you’re ready to invest like a pro, make sure you consider the following factors so you choose the brokerage company that’s right for you.

Fees

Trades may be inexpensive, but online brokerages have come under fire for having a slew of hidden, unadvertised fees.

The American Customer Satisfaction Index reports that online brokerages’ fees are most likely to irritate consumers.

Customer satisfaction

Customer service and easy-to-use online interfaces can make up for the fees.

Charles Schwab topped the ACSI’s list for customer satisfaction of Internet brokerages. Fidelity Investments followed.

E-Trade performed the worst with customer satisfaction, but its rank in the annual report has improved over time.

Insuring investments

See if your brokerage product has insurance protection.

Insurance protection for brokerage products protects investors against insolvency of the financial institution, but it doesn't compensate for investment losses or bad investment decisions.

The Securities Investor Protection Corp., or SIPC, is the agency that reimburses investors with assets in bankrupt and financially troubled brokerage firms to a limit of $500,000 per customer, including a maximum of $250,000 for cash claims. Financial institutions may have insurance over and above the coverage it has as a member of the SIPC, but this also would only protect against insolvency.

Regardless of the brokerage company you choose, remember that you can consult with a fee-only financial adviser to ensure that you’re comfortable with what you’ve invested in and the risks you face with your investments.

Bullets, barbells and CDARS for your CD’s

There are many ways to manage your investments, one of the most popular being buying certificate of deposit or a CD. But not all CD’s are created equal nor do you have to approach every CD purchase with the same strategy each time.

Here are some strategies you might have yet to consider.

Strategy bullets

With a bullet strategy, you stagger purchases of CDs but make sure they all mature around the same time. By staggering the purchases you reduce the risk of buying all the CDs when rates are at their lowest…a good strategy when you're saving money for a specific goal such as college or a new future big purchase-like a car-you know you’ll need money for in four or five years.

Strategy barbell
The barbell strategy allows you to take advantage of high yields at some point on the yield curve while hedging your bet at another point. Balancing your investment you use some money to buy CD’s with longer maturities paying the best interest, and spend the rest of your money on short-term CD’s allowing some liquidity and the advantage of possible rate changes.

Strategy CDARS
Normally, bank deposits are insured up to $100,000 by the Federal Deposit Insurance Corporation, or FDIC, and up to $250,000 in the case of retirement accounts. CDARS, a deposit placement service, gives you a way to invest more than $100,000 in CDs, with the full amount insured. Certificate of Deposit Account Registry Service, is run by Promontory Interfinancial Network. Banks that subscribe to CDARS can give individual CD buyers up to $10 million in FDIC coverage.

There are approximately 700 banks across the country offering CDARS.

The bullet, barbell and CDARS are just a few ways to approach your CD investment. It’s your money, be smart when using it to make you more money.