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Buying stocks online - Is it safe?

The stock market can be unpredictable, and investments can fluctuate in value. So it is essential to understand that investing in the stock market carries inherent risks.

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man at table with phone in hand consulting investments

Buying stocks online has become a popular and convenient way to invest in the stock market. However, with the increase in online stock trading, it's important to consider the safety of purchasing stocks through the internet. Is it safe to buy stocks online?

Cybersecurity Risks

One major concern when buying stocks online is the risk of cyber attacks. Hackers can potentially access your financial information and steal your money if you're not careful. To protect yourself, it's important to use a secure network and avoid clicking on links or downloading attachments from unknown sources. It's also a good idea to use a virtual private network (VPN) when accessing your online brokerage account to add an extra layer of protection.

Fraudulent Websites

Fraudulent websites are another risk to consider when buying stocks online. These sites may appear legitimate and offer seemingly attractive investment opportunities, but their ultimate goal is to steal your personal and financial information. They may do this by asking you to enter your login or financial information on a fake website or offering fake investment opportunities requiring you to provide sensitive information to participate.

To avoid falling victim to a fraudulent website, it's essential to do your research and only use reputable online brokerages. Look for websites with secure connections (indicated by a URL that starts with "HTTPS" and a padlock icon) and be wary of any website that asks for your personal or financial information without a good reason.

You should also be cautious of any unsolicited emails or phone calls claiming to be from your brokerage, as these could be attempts to scam you. If you receive an unsolicited communication that seems suspicious, contact your brokerage directly to verify its authenticity before providing any information.

Insider Trading

hands holding a smartphone with trade app and money on the table

Insider trading is the use of non-public information to make investment decisions. It is illegal and can result in serious consequences for those involved, including fines and even jail time. While insider trading is not necessarily related to the safety of buying stocks online, it's important to be aware of this risk when investing.

Insider trading can occur when an individual accessing confidential information about a company uses that information to make investment decisions. This could be an employee of the company, a board of directors member, or even a government official. Insider trading is illegal because it gives some investors an unfair advantage and can potentially manipulate the stock market.

To protect yourself from insider trading, use only publicly available information when making investment decisions. This includes information released through official channels, such as press releases and financial reports. Avoid relying on information from non-public sources, as this could be illegal insider information.

Volatility of the Stock Market

One final aspect to consider when it comes to the safety of buying stocks online is stock market volatility. The stock market can be unpredictable, and investments can fluctuate in value. So it's essential to understand that investing in the stock market carries inherent risks and to carefully consider your financial goals and risk tolerance before making any investments.

SoFi experts say, "More ways to invest - Shop all in one place."

Overall, buying stocks online can be a safe and convenient way to invest in the stock market if you take the necessary precautions. By being aware of cybersecurity risks, avoiding fraudulent websites, avoiding insider trading, and understanding the stock market volatility, you can protect yourself and make informed investment decisions when buying stocks online.

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