Yellowknife (Jan 10/00) - While trading stocks and bonds still occurs on Wall Street, the Internet gives people the chance to buy, sell and investigate stocks online for a fraction of the cost.

Using the Internet to direct their stock-buying has allowed Northerners the freedom to determine their financial future, even when the closet bank may be hundreds of kilometres away.

Colleen Boot in Norman Wells enjoys the freedom and accurate information available online.

"It's better than a newspaper because it's up-to-date, to the minute. By the time we get our Globe and Mail sent to us the stock information is two to three days old. So if someone wants to follow a stock very closely, it's much better."

Tom Sainsbury of Inuvik has been trading stocks online for the past four years.

"You can set up a portfolio and watch what (the stocks) do. If you've got a self-directed RRSP you can do it yourself. You can have it come out of your chequing account or have them take it out of your cash in your RRSP."

One of the most popular aspects of buying and selling stocks online is the substantial savings in commission fees. Most banks offer rates that are 50 to 90 per cent less than full-service brokerage firms. The Royal Bank's Action Direct prices are between $29 to $40 per transaction, up to 1,000 shares or $2,000. After that, the commission rate is based on a percentage rate on a per share basis.

But there are disadvantages. While a brokerage firm can offer extensive research services and investment advice, banking Web sites are a do-it-yourself business.

Sainsbury recommends doing your research before starting.

"There's more information on the sites and there are more sites available but you still have to go looking. You have to know what you're looking for. Do a little bit of reading both in financial magazines and online. Also talk to a financial analyst. Stocks can cost anywhere from a penny or two or a nickel up to $500 a share."

And with the number of investment opportunities available, things can sometimes be confusing for the average consumer. There are numerous options for RRSPs, mutual funds, basic stocks, GICs (guaranteed investment certificates), T-bills (treasury bills), among others to invest in.

Should you have a portfolio with numerous holdings or put all your eggs in one basket? How does the consumer make a choice?

Many financial investment books recommend that you do research when planning your investment strategy. Number one on their list is the level of risk.

You have to decide how much risk you are willing to take on your investments. This means considering whether you are willing to possibly lose all the money you are investing in a worst case scenario.

If you are young and can earn that money back over time, then you may be willing to take that chance. If, however, you are older and this sum is to be used for retirement purposes, you may wish to be more conservative in your approach.

But if you've set aside this money to play the stock market, you may decide to go with a high-risk option, which hopefully, has high returns.

Some risk takers play a game of wait and see with their stocks; buying when stocks are low and waiting until they've reached a sufficiently high price, giving them a substantial profit. Advisors say this approach is definitely the most risky and often does not work.

Number two on the financial advisors list is to plan when you may need that money available to you or its liquidity. If you know you will need to put down a substantial amount for a home downpayment in the near future, it wouldn't make sense to have it all in stocks. If you need that money quickly you may end up having to cash out when stock prices may be down.

Finally, the books all recommend choosing an investment strategy that will reduce your tax rate in the future. Therefore, Canadian advisors strongly recommend that consumers stock up on their RRSPs before branching out into stocks. This is partly because any interest income from stocks is taxable and because of the excellent tax shelter protection of many RRSPs.

Self-directed RRSPs allow you the freedom to play the mutual fund shell game while still enjoying the tax-shelter benefits. And spousal RRSPs give you that much more leeway in building your portfolio.

While the actual process of buying and selling stocks online may be much easier than before, the research and knowledge base required to perform this task is extensive.

Be prepared to put the time in to carefully analyze your financial position and then head off prepared for the world of cyber-trading.