Overnight charges for brokers holding stocks?
If you are trading CFDs, which are usually traded on margin, you will usually be charged an overnight financing fee for long positions held overnight and you will receive an overnight financing credit for short positions held overnight. Most CFD brokers will have their overnight financing rates set at + or - 2.5% or 3% from the country's official interest rates. So if your country's official interest rate is 5% and your broker uses + or - 2.5%, you will get a 2.5% credit for any short positions held overnight and pay 7.5% fee for any long positions held overnight. In Australia the official interest rate is 2.5%, so I get 0% for short positions and pay 5% for long positions held overnight. If you are looking to hold positions open long term (especially long positions) you might think twice before using CFDs to trade as you may end up paying quite a bit in interest over a long period of time. These financing fees are charged because you are borrowing the funds to open your positions, If you buy shares directly you would not be charged such overnight financing fees.
Congratulations on being in this position. Your problem - which I think that you identified - is that you don't know much about investing. My recommendation is that you start with three goals: The Motley Fool (www.fool.com) has a lot of good information on their site. Their approach may or may not align with what you want to do; I've subscribed to their newsletters for quite a while and have found them useful. I'm what is known as a value investor; I like to make investments and hold them for a long time. Others have different philosophies. For the second goal, it's very important to follow the money and ask how people get paid in the investment business. The real money in Wall Street is made not by investment, but by charging money to those who are in the investment business. There are numerous people in line for some of your money in return for service or advice; fees for buying/selling stocks, fees for telling you which stocks to buy/sell, fees for managing your money, etc. You can invest without spending too much on fees if you understand how the system works.  For the third goal, I recommend choosing a few stocks, and creating a virtual portfolio. You can then then get used to watching and tracking your investments. If you want a place to put your money while you do this, I'd start with an S&P 500 index fund with a low expense ratio, and I'd buy it through a discount broker (I use Scottrade but there are a number of choices).  Hope that helps. Michael gave a good answer describing the transaction but I wanted to follow up on your questions about the lender. First, the lender does charge interest on the borrowed securities. The amount of interest can vary based on a number of factors, such as who is borrowing, how much are they borrowing, and what stock are they trying to borrow.  Occasionally when you are trying to short a stock you will get an error that it is hard to borrow. This could be for a few reasons, such as there are already a large amount of people who have shorted your broker's shares, or your broker never acquired the shares to begin with (which usually only happens on very small stocks). In both cases the broker/lender doesnt have enough shares and may be unwilling to get more. In that way they are discriminating on what they lend. If a company is about to go bankrupt and a lender doesnt have any more shares to lend out, it is unlikely they will purchase more as they stand to lose a lot and gain very little.  It might seem like lending is a risky business but think of it as occurring over decades and not months. General Motors had been around for 100 years before it went bankrupt, so any lender who had owned and been lending out GM shares for a fraction of that time likely still profited.  Also this is all very simplified. JoeTaxpayer alluded to this in the comments but in actuality who is lending stock or even who owns stock is much more complicated and probably doesnt need to be explained here. I just wanted to show in this over-simplified explanation that lending is not as risky as it may first seem. "If the stock is below its purchase price, there is no way to exit the position immediately without taking losses. Since presumably you had Good Reasons for buying that stock that haven't changed overnight, what you should probably do is just hold it and wait for the stock to come back up. Otherwise you're putting yourself into an ongoing pattern of ""buy high, sell low"", which is precisely what you don't want to do. If you actually agree with the market that you made a mistake and believe that the stock will not recover any part of the loss quickly (and indeed will continue going down), you could sell immediately and take your losses rather than waiting and possibly taking more losses. Of course if the stock DOES recover you've made the wrong bet. There are conditions under which the pros will use futures to buffer a swing. But that's essentially a side bet, and what it saves you has to be balanced against what it costs you and how certain you are that you NOW can predict the stock's motion. This whole thing is one of many reasons individuals are encouraged to work with index funds, and to buy-and-hold, rather than playing with individual stocks. It is essentially impossible to reliably ""time the market"", so all you can do is research a stock to death before making a bet on it. Much easier, and safer, to have your money riding on the market as a whole so the behavior of any one stock doesn't throw you into a panic. If you can't deal with the fact that stocks go down as well as up, you probably shouldn't be in the market." CFDs (Contracts for Difference) are basically a contract between you and the broker on the difference in price of the underlying between the time you open a position and close a position. You are not actually buying the underlying. With share CFDs, the outcome is a bit like buying the underlying shares on margin. You pay interest for every day you hold the CFDs overnight for long CFDs. However, with short positions, you get paid interest for every day you hold your short position overnight. Most people use CFDs for short term trading, however they can be used for medium to longer term trading just as you would hold a portfolio on margin. What you have to remember is that because you are buying on margin you can lose more than your initial contract amount. A way to manage this risk is by using position sizing and stop loses. With your position sizing, if you wanted to invest $10,000 in a particular share trading at $10 per share, you would then buy 1000 shares or 1000 CFDs in that share. Your initial expense with the CFDs might be only $1000 (at a margin rate of 10%). So instead of increasing your risk by having an initial outlay of $10,000 with the CFDs you limit your risk to the same as you were buying the shares directly. This is often the case where traders are closing out short positions they don't want to hold overnight, for a variety of reasons that matter to them.  Most frequently, this is from day traders or high-frequency traders settling their accounts before the markets close. "Remember that in most news outlets journalists do not get to pick the titles of their articles.  That's up to the editor.  So even though the article was primarily about ETFs, the reporter made the mistake of including some tangential references to mutual funds.  The editor then saw that the article talked about ETFs and mutual funds and -- knowing even less about the subject matter than the reporter, but recognizing that more readers' eyeballs would be attracted to a headline about mutual funds than to a headline about ETFs -- went with the ""shocking"" headline about the former. In any case, as you already pointed out, ETFs need to know their value throughout the day, as do the investors in that ETF.  Even momentary outages of price sources can be disastrous. Although mutual funds do not generally make transactions throughout the day, and fund investors are not typically interested in the fund's NAV more than once per day, the fund managers don't just sit around all day doing nothing and then press a couple buttons before the market closes.  They do watch their NAV very closely during the day and think very carefully about which buttons to press at the end of the day.  If their source of stock price data goes offline, then they're impacted almost as severely as -- if less visibly than -- an ETF. Asking Yahoo for prices seems straightforward, but (1) you get what you pay for, and (2) these fund companies are built on massive automated infrastructures that expect to receive their data from a certain source in a certain way at a certain time.  (And they pay a lot of money in order to be able to expect that.)  It would be quite difficult to just feed in manual data, although in the end I suspect some of these companies did just that.  Either they fell back to a secondary data supplier, or they manually constructed datasets for their programs to consume." Charging very high prices for additional standard services: See Commission & Fees: https://brokerage-static.s3.amazonaws.com/assets/robinhood/legal/RHF%20Retail%20Commisions%20and%20Fees%20Schedule.pdf Link is down in the footer, to the left... This was the day traders dilemma. You can, on paper, make money doing such trades. But because you do not hold the security for at least a year, the earnings are subject to short term capital gains tax unless these trades are done inside a sheltered account like a traditional IRA.  There are other considerations as well: wash sale rules and number of days to settle.  In short, the glory days of rags to riches by day trading are long gone, if they were ever here in the first place.  Edit: the site will not allow me to add a comment, so I am putting my response here: Possibly, yes. One big 'gotcha' is that your broker reports the proceeds from your sales, but does not report your outflows from your buys. Then there is the risk you take by the broker refusing to sell the security until the transaction settles. Not to mention wash sale rules. You are trying to win at the 'buy low, sell high' game. But you have a 25% chance, at best, of winning at that game. Can you pick the low? Maybe, but you have a 50% chance of being right. Then you have to pick the high. And again you have a 50% chance of doing that. 50% times 50% is 25%. Warren Buffet did not get rich that way. Buffet buys and holds. Don't be a speculator, be a 'buy and hold' investor. Buy securities, inside a sheltered account like a traditional IRA, that pay dividends then reinvest those dividends into the security you bought. Scottrade has a Flexible Reinvestment Program that lets you do this with no commission fees.