Mellody's Math: Do-It-Yourself Investing

N E W &nbsp Y O R K, Feb. 15 -- Over the last three years, personal investing has undergone significant changes.

The late 1990s were witness to 100 percent-plus annual gains for the online brokerage sector. Millions of people were running home to their home computers or logging on at work to place daily trades. The popular consensus was that the stock market was a fool's paradise and the Internet was a trusted means to find the hottest buys and guaranteed winners.

Enter March 2000. Dot-com became dot-bomb and the same millions lost millions on the same names in their portfolios that were off the charts for most of 1999 and early 2000.

Thousands of people quit their jobs to become full-time day traders, with little to show for it. Those who took their finances into their own hands were unpleasantly awakened from the late '90s investors' daydream.

Dramatic Shift in Focus

Online investing may not be the hotbed it once was, but people are still logging on and using the Internet to invest — just not at the same pace. In 2001, an estimated 23.2 million people around the world invested online, an increase of 13 percent from 2000.

That said, the online brokerage environment has undergone a dramatic shift in focus, from day trading to financial planning and financial advisory services.

Firms like Charles Schwab, the nation's biggest online discount brokerage, now offer a wide array of online financial planning and advisory services. Those online companies with virtual offices (and virtual earnings) have now resorted to old-fashioned bricks and mortar. E*Trade now operates mini-branches in select Target stores, offering services similar to your neighborhood bank and allowing you to purchase certificates of deposit or open up a checking, savings or money-market account.

Know When to Go Pro

While a myriad of online investment tools is sufficient for some, trends suggest people need and want more than online charts, calculators and analyst reports to make informed decisions.

The Internet brokerages are throwing their customers lifelines in the form of online advice. By the end of 2002, an estimated 82 percent of the nation's online brokerage sites will feature financial advice on their Web sites, compared with just 33 percent today.