Persfi/29inches/dp1st/mark2nd

JANE BRYANT QUINN

Investing online is starting to feel like a slippery slope. You set up an account with a brokerage house for the convenience of managing money from home. Next thing you know, you’re playing the market as if it were a video game and taking on more risk.

It’s seductive to watch the prices of stocks change on your screen and know that you can buy or sell with just a mouse click. Investors probably trade more often than they did when they invested by phone.

As many as 7.5 million investors currently trade online. The discount brokerage firms are making it ever more attractive to invest this way. Computerized Investing, a publication of the American Association of Individual Investors in Chicago, recently compared the prices and services of 72 discount firms. Its findings: At almost half the firms, minimum commissions for buying or selling online are currently less then $15 per transaction.

Last year, only about a third of the firms offered such a low price, says CI Associate Editor Kenneth Michal. Brown & Co. (www.brownco.com) charges just $5 per online trade up to 5,000 shares. Empire Financial (www.lowfees.com) charges $6.95 for small trades, and zero for trades of 1,000 shares or more if the stock sells for $5 and up.

For small traders, this compares with $12 at Waterhouse Securities (www.waterhouse.com), $14.95 at E-Trade (www.etrade.com), $25 at Fidelity Brokerage Services (www.fidelity.com), and $29.95 at Charles Schwab Co. (www.schwab.com)

There are often different prices for trades over 1,000 or 5,000 shares. You’re usually charged extra for talking to a broker personally. The higher-priced brokers tend to offer more services, such as access to no-load mutual funds. Which firm you choose will depend on what you need.

Last month, Barron’s magazine rated the top online brokers, based on services, reliability and ease of use. Its top choices: DLJDirect (www.dljdirect.com; $20 minimum commission), Discover Brokerage Direct (www.discoverbrokerage.com; $14.95), National Discount Brokers (www.ndb.com; $14.75) and Web Street Securities (www.webstreetsecurities.com; $14.95).

The commissions given above, by the way, are for market orders meaning orders that are executed at the stock’s current market price. You’ll typically pay more if you place a limit order, specifying the maximum price at which you’re willing to buy or sell. For example, Brown charges $10 for limit orders up to 5,000 shares.

One thing you no longer pay for at most firms: up-to-the-minute, real-time stock quotes. Formerly, price quotes were given free, although with a 15-minute lag. For real-time quotes, there was a charge. But now, most discount brokers offer real-time quotes free, CI’s Michal reports. One exception: Empire Financial, which charges $14.95 a month.

Two important things to know about investing online:

? When you invest through a discount broker, you are responsible for yourself. If you do something dumb because you didn’t know enough about investing, you have only yourself to blame.

At full-service brokerage firms, which dispense investment advice, the brokers are supposed to recommend only those investments that suit your personal and financial circumstances. You can hold them responsible, if you lose money because they went too far afield. But discount brokers don’t give advice. You’re on your own.

? You are not repeat, not apt to improve your long-run investment returns by trading stocks more actively. This was pretty well established by finance professor Terry Odean of the University of California at Davis.

Odean followed 10,000 trading accounts at a large discount brokerage firm for seven years. On average, he found that the stocks people sold did better than the stocks they replaced them with. In a second study of 158,000 accounts, he found that the more people traded, the less money they made.

Used prudently, online investing can be a great convenience. Used obsessively, it can wreck you.

I recently read some sad stories about novice investors. One involved a woman who was trading her $100,000 individual retirement account in order to make ends meet. She put in a confusing set of orders and cancellations, accidentally bought more than she could pay for, and lost almost $64,000.

You think it won’t happen to you? Think again.

Generation gap

It doesn’t pay to have memories in stock markets like this. You’re apt to be thrown off your stride by the words of an older world dusty stuff like “earnings” and “dividends.”

This is not your grandfather’s stock market. I don’t know if anyone has studied money-manager performance by age, but in any era I’d bet on the unremembering young. The Dow Generation takes it on faith that God created stocks in order to make them rich. That’s their advantage.

All of us live, in part, in the world in which we first came of age. The Depression Generation thought stocks were for madmen, even when they bought a few. But for the young, nothing went before. The Dow Generation knows, as scripture, that stock markets exist to deliver 20 percent returns.

In every generation’s worldview, something’s risky and something’s safe. To the DowGen, stocks are safe.

So, how tied are we to the Dow? Let me count the ways:

? Social Security: Reformers, especially the affluent young, want private accounts, to invest in stocks. They assume that stocks will always yield a higher lifetime income than Social Security could.

Estimated figures for Social Security reform suggest that high-income people would indeed do better in stocks, even if the market went flat for many years. That’s because high-income people get less for their payroll taxes than middle- or lower-earners do.

? 401(k) plans: More than two-thirds of plan balances are invested in stocks today, according to the Employee Benefit Research Institute. The younger you are, the higher your equity stake.

? Stock options: If 401(k)s can make your rich, why not leverage your luck? Of 350 large companies surveyed, more than one-third are giving stock options to most or all of their workers, reports the consulting firm William M. Mercer. That’s double the number in 1993.

In a bold step last month, CBS announced it was ending traditional pensions for new hires, and substituting a stock-option plan for all of its employees. Senior Vice President Martin Franks boasts that, over the past two years, CBS stock has doubled. Right-o, but from 1990 to 1995, it dropped 67 percent.

What if those were your last five years to exercise? Bye-bye pension substitute, at least for that particular period of time. Only the Dow Generation believes that, over any decade, the stock of the company they work for must go up.

Syndicated columnist Jane Bryant Quinn can be reached in care of the Washington Post Writers Group, 1150 15th St., Washington, D.C. 20071-9200.