James Johnson scoffs at the idea that investing should be left to professionals. "We all have at our fingertips, via the Internet, 80% to 90% of the tools the professionals say they have," says the 54-year-old economic development official in Oklahoma City. Johnson should know: He was a stockbroker back in the 1970s and '80s before changing careers. A self-proclaimed do-it-yourself investor, Johnson says he can compete with professionals: "If you compare the results of a pro against a do-it-yourselfer who has studied and done this thing for a while, you'll find pretty comparable numbers." Johnson says he has seen a return of more than 15% a year over the past few years on his $50,000 stock portfolio. The S&P 500 index, by comparison, has averaged about 11% over the past five years. Of course, at the same time, many unseasoned investors have waded into the stock market only to sink like stones. Yet, for those who have resolved to make their capital work harder for them this year-and who meet a few key criteria-online investing offers one route to success. At the very least, it's a way to avoid the steep commissions that full-service brokers can charge. Making the Commitment The stock market's recent troubles should not scare you off-quite the opposite, says Harry Domash, publisher of Winning Investing, a stock and mutual fund advisory newsletter, and a columnist for the San Francisco Chronicle. "I think it's less dangerous to start buying stocks when the market is down than when it's up," he says. There's a huge caveat, of course. Unless you have a cool head, a strong stomach, and a commitment to invest time as well as money, it's probably wise not to be your own broker. After all, successful investors must not only pick and monitor their investments, they also have to study constantly to make sound decisions. "You have to love it," says Allen Boyce, a 75-year-old retired New York City school principal who now runs a jewelry business with his wife, Joan, 66. Boyce spends at least 12 hours a week monitoring his $1.5 million investment portfolio, reading investing newsletters and magazines, and surfing Websites. Venturing Online The first step to online investing is choosing a discount brokerage. Many of these outfits have merged over the past several years and, in the process, lowered commissions to $7 to $10 per trade. The prices vary depending on whether the brokerage offers independent research and other features, such as access to business newswires and other investor education resources. Still, paying $10 or so to buy stocks, mutual funds, or exchange-traded funds (ETFs), and another $10 to cash out, can dramatically cut into gains or compound losses on small investments. Generally, stock traders should place at least $1,000 per trade to keep their gains from being eaten up by commissions. There may be occasions when investors have reason to invest in one particular stock, but keep in mind that one stock isn't a portfolio. "You have to invest enough so you can buy at least half a dozen stocks," Domash says. "If you don't have diversity, you can take one bad stock and lose two-thirds of your money." Of course, do-it-yourselfers can buy mutual funds online, which bypasses the hefty up-front commissions that many brokers charge while giving you more diversification. ETFs are a relatively inexpensive way for active investors to gain exposure to sectors or regions. Another option: Your employer's 401(k) plan, along with the usual complement of mutual funds, may provide the option of a self-directed brokerage account. Nearly 20% of 401(k) plans now offer a "brokerage window," or account, to participants, according to research firm Hewitt Associates. Ongoing Management Remember, going it alone means the techniques and strategies previously employed by your broker or adviser, including asset allocation, are now your responsibility. One easy way to lessen the time you'll need to dedicate to your portfolio is to select a mix of mutual funds. A starting point can be Morningstar's style boxes, which are featured in every fund snapshot on Morningstar.com. The boxes quickly identify whether a fund follows the "value" or "growth" investing approaches and identifies what size companies it invests in. "You don't need to be overly rigid," says Lawrence Jones, a fund analyst with Morningstar. "But you should diversify by market cap and across the value/growth spectrum." At the most basic level, there's no getting around the work that's involved, because there are thousands of investment vehicles that can be purchased through the brokerage sites. When selecting a brokerage firm, you'll want to go by more than cost, and scrutinize the types of research and news reports that it provides. You may also want to augment your own resources with access to Morningstar and Lipper, which offer some free features but charge fees for more detailed mutual fund analysis. Of course there are a slew of free Websites that offer surprisingly detailed information about stocks. MSN Money, for instance, lets investors screen for companies with growing sales, low debt, and a range of other attributes. Yahoo! Finance allows investors to easily spot warning signs around a stock (if it begins trading below its moving average price over the previous 50 days, for instance). Strength in Numbers There is no need to research, buy, or sell investments in isolation. Internet chat rooms abound, though the quality of their information varies. Still, another way to learn as you invest is by joining an investment club. For example, in addition to his individual portfolio, Johnson invests through, and is a director of, a club that's affiliated with BetterInvesting. The organization provides everything from a set of principles to stock selection tools (www.betterinvesting.org). Club members contribute $10 to $50 per month and research and recommend stocks to the group, which votes whether to buy. The club serves as a mini university and clearinghouse for ideas. "Probably all of our members invest outside [the] club as well," Johnson says. Successful do-it-yourselfers caution novice investors who look at brokerages as online casinos. Online brokerages make it all too easy to jump from one enticing stock to another with a few keystrokes, but losing your head could mean losing your precious capital. "Brokers try to give you all kinds of tools to encourage fast trading," Domash warns. "That's the way they make their commissions." BetterInvesting's O'Hara says good investors are decisive. Beginners may be tempted to size up their skills by using free investing game sites, but using real money has a way of focusing the mind, he says. "Pick an amount you are willing to put into the market every month, as little as $25 or $50," O'Hara says. "Build your confidence and get into a learning cycle." MAKE THE RIGHT CHOICE: TOP DISCOUNT BROKERS Discount Broker Website Typical Commission** Account Minimum No. of Branches Comment Charles Schwab www.schwab.com $12.95 $1,000 270 Professionals can evaluate your portfolio and make recommendations, one on one, for free Fidelity www.fidelity.com $19. 95 $2,500 114 Strong research along with tools that can, for example, gauge hypothetical impact of a buy or sell on an overall portfolio Muriel Siebert www.siebert net.com $14.95 none 7 Nearly 3,000 mutual funds, few hidden fees Scottrade www.scot trade.com $7.00 $500 326 Low, flat commisssions Sharebuilder www.share builder.com $4.00* none 0 Offers the ability to invest in small increments TD Ameritrade www.tdameri trade.com $9.99 none 100 Independent research from Standard & Poor's and Morningstar *Through automatic investing program **Standard price for an online stock trade