You run a huge risk investing online. And I don't only mean losing money. I'm also talking about risking something that can be just as valuable--your time. Yes, saving time is a powerful reason for going online to invest. And that's possible, but it's not a lock--not when even some of the best financial sites commit what I call the Seven Deadly Web-Site Sins:
-- Dirty data. The Web swiftly brings to your fingertips all kinds of real-time information. Unfortunately, not all of it is real accurate. The more you use the Web to research investments, the more you'll find yourself double-checking data. You have to watch out for even such simple facts as market capitalization. Check, for example, the market cap of telecom giant Teléfonos de Mexico (TMX
) and you might "learn" that it's the world's most valuable company. By miscounting its number of shares outstanding, America Online (AOL
) gives the company a $510 billion market cap--more even than actual No. 1 General Electric's (GE
) $490 billion. Meanwhile, a bunch of other sites, including AOL's archrival, MSN, understate the real TelMex figure, which is around $25 billion. So, with online data, live by Ronald Reagan's words: Trust, but verify. If a data point is crucial, take the time to confirm it.
-- Drowser warfare. Drowser? If a site isn't "optimized" for your Web browser, you'll get drowsy waiting, waiting, waiting for pages to load. Or, as with Quicken.com's portfolio tracker, you can't make full use of its functions unless you've got the right browser (in this case, Microsoft's Internet Explorer). Another time-waster: sites that penetrate corporate firewalls very slowly, so forget using those from the office.
-- Deportation. If you set up a portfolio at a financial site, hope the site survives. In January, when BusinessWeek Online absorbed its sibling site, Standard & Poor's Personal Wealth, it asked PW users to move their portfolio data to the BW site's different tool. If the users didn't make time for that cumbersome job, their data got purged. Something similiar may happen soon when CNBC.com merges with MSN MoneyCentral. MSN is still working on how to move users' data, but CNBC.com's portfolio tracker has been sentenced to the gulag.
-- Fuzzy math. It would be nice to take as gospel every calculation delivered by an online tool. Don't. One of my favorite sites, myStockOptions.com, had to fix a bug last July in how it calculated the potential tax hit on exercising employee options. Moral: Before taking action on advice given by an online tool, take the time to ensure that you understand its logic and that its conclusions pass the test of common sense.
-- Chef's surprise. Spend more than a few moments with an online retirement-planning or asset-allocation tool, and you'll wonder: "How did it come up with that advice?" Some sites don't tell you. With scanty notes on methodology and data sources, you can't peek in the kitchen to see how they cook up answers. Brokers' asset-allocation tools, such as those you can find at the Fidelity Investments and Charles Schwab (SCH
) sites, are cases in point. Here's a general rule: If an advisory tool has as many disclaimers as explanations, don't waste your time.
-- Attention-gluttony syndrome. Many sites send newsletters and e-mail alerts to keep you clicking their way. Some abuse the privilege of your attention by sending a steady stream of e-mails. When registering, see if there's a quick way for you to change e-mail options. The Motley Fool does this right, with a link in each e-mail to a page for ending them.
-- Captive data. The biggest pot of money many people keep is in a 401(k) or other employer-run retirement plan. More and more companies let employee-investors track accounts, alter savings rates, or even trade online. Yet all this turns frustrating, because few sites offer ways to "export," or download, balances and transaction records. To get a true look at your portfolio, you're left with laborious pencilwork or keyboarding to merge these data with other holdings. Employers, thanks for helping us save money. Now, help us save time. Let our data go.
Copyright 2001 , by The McGraw-Hill Companies Inc. All rights reserved.
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