It can be pretty overwhelming to figure how to buy a stock when you are just getting started, so I broke down all of the basics for you!
The financial market can be a very overwhelming place to newcomers; from the complex jargon to the seemingly risky nature of investment tends to scare scare people away.
But if you’re reading this article then you’re probably not someone who’s that easily deterred. I would like to offer to you a step-by-step guide on approaching brokerage accounts, selecting the right picks, and how to buy a stock.
What is a Stock?
If you aren’t clear, a stock is a financial asset that represents an owning a piece of a company. When you buy a stock in a company, no matter how small it is, you become a partial owner of that company and may be granted voting rights in the company as well.
Stocks value increase over time, which allows you to sell them when they increase in value and receive a profit.
Some stocks may also pay dividends, which is when a company pays you a little bit for holding their stock. Kind of like a company loyalty program sending you something free for being a loyal customer
Open a Brokerage Account
What is a Brokerage Account?
A Brokerage Account is basically just like a bank account but instead of just sitting in cash, it gives you the option to invest it.
How do I choose a Brokerage Account?
When selecting a brokerage you should look at their fees, terms of services, availability of desired features. Next, you’ll need to decide between a Robo-advisor, a computer algorithm designed to calibrate your investment choices using sophisticated software or to pick the investments on your own.
The Application Process
Once you’ve selected the online brokerage account that you want, you can start applying. The application process will take you no more than 15 minutes, and it’s just like opening a bank account.
You’ll have to provide some basic personal details and identification for security purposes, and after depositing some initial money you’ll be all set.
What Stocks should I Buy?
Before you invest, do some basic research into the companies you might be interested in investing in.
You should start with researching companies that you’re most familiar with as a consumer. Learn basic information about the company like revenue figures, stated costs and details on the quality of management that they’ve employed.
It will provide you with some contextual information on the kind of company that it is and help you to better understand it holistically.
Ideally, you should select a company that you genuinely want to become a partial owner of and have full confidence in. You don’t want to invest in companies that you do not believe in or understand.
Your brokerage account may provide you with basic analytical tools to use. They may offer some video tutorials advising you on how you should choose the right companies.
How to Place an Order
After you’ve decided on what type of stock to buy, you can now acquire them by submitting either a market order or a limit order.
A market order involves an investor purchasing stocks at whatever the current market value of the stock is.
With a limit order, you select a maximum price that you are willing to pay. The trade is made only when the market price of the stock reaches below the pre-selected maximum price.
As a new investor, you might find the stock market to be a little overwhelming. Hopefully, this guide will make it easier for you to start investing by choosing the right stocks for you