How to Buy Stocks - As explained by Investingport

“Buy into a company because you want to own it, not because you want the stock to go up”

  • Warren Buffet

As a potential investor seeking to explore the stock market one of the major steps to take is actually buying stocks, not just buying stocks but also, knowing when to buy stocks. Knowing when to buy stocks can be determined by properly evaluating a stock and deciding what prices work best for you which in turn would help you decide whether you’d prefer a market order or limited order. A market order is the purchase of stocks at the prevailing market price while a limit order is the purchase of stocks at a limited price. You can either buy stocks through a full-service broker or an online brokerage. Buying stock through a broker or brokerage attracts extra charges, you can buy stocks directly from the company you want to invest in to save on broker fees, but it is best to do so through a broker or brokerage. 

Steps to Buying Stocks

  • Set up an account with a brokerage firm (fund your account): this is almost as easy as setting up a bank account. All that’s required for the setup is a correctly filled application form, valid proof of identification, and most preferred account funding choice. 

  • Select your stocks: after setting up your account the next thing to consider is the stocks selection. Beforehand, you should have conducted personal research on selected companies that would help you rightly select what stocks to buy.  Asides checking out company reviews you can also check out the selected companies’ websites for conference call transcripts, financial reports, and SEC filings.

  • Choose the number of shares you’d like to buy: There are no rules for determining how many shares you can buy. If there would be any determining factor, it would have to be your budget.

  • Select your stock type: from the information provided on your broker website you can either select a market order based on the prevailing market price or a limit order based on the current price limitation.

  • Buy and sell stocks through the brokerage

In recent times, the number of brokerage firms has increased, and each brokerage seems to have certain specifications in a bid to attract clients and set them above the competition. Before selecting just any brokerage to commit your money to as an investor, it is best to carry out personal research (reviews and testimonies) on selected brokerage firms before committing your money to them. The first thing to consider when considering brokerages is the commission costs and the kind of support you are looking for. The commission cost is basically the fees brokerages charge investors per stock trade or purchase. Online broker fees are relatively low compared to full-service brokers. On the flip side, relatively low or commission costs will affect the investment returns. Two online brokerages have been rated as the best for new or amateur investors seeking low commission investment costs for a start, they are TD Ameritrade and E-Trade they both offer commission-free stocks trading and exchange-traded funds.

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