buying stock

Buying Stocks

Investing your money is always a great way to make your money grow. When you buy stocks, you are buying a security that is basically a fraction of a corporation. The more shares you have, the more you have invested in that corporation. As that corporation grows, and demand increases, the price of the stocks goes up. You can hold on to your stocks or sell them to make a profit, but the longer you hold onto a stock that increases in value, the more you are going to end up making. Owning stocks is a little like gambling, but if you know what you are doing, or at least hire someone who knows what they are doing, you can minimize risk. If you are interested in buying stocks, here are some things you should know.

Selecting a Stockbroker

The simplest way to purchase stocks is to select an online stockbroker. You can purchase them through a stockbroker like Robinhood, E*Trade or Fidelity. But those are just a few of the options available. By opening and funding an account online, you can purchase new securities in a matter of minutes. Its really as easy as setting up a bank account and everything that goes along with that such as providing identification and filling out an application. Of course, if you don’t want to do it through these means, you can also select a full-service stockbroker like Charles Schwab or buy stock directly from the company you want to invest in.

Determining Which Stock You Want to Buy

That’s really the big question isn’t it? You don’t want to invest in just any company, you want to invest in ones you believe in. You can start by looking at companies you are already a consumer of.  However, looking at just the data of the current market value and the real-time gyrations is going to be overwhelming and not a good indicator of how a company will do in the long run.

You’ll give yourself more options if you invest in the type of company you believe in and go from there. Let’s say you are interested in oil, computers, gaming, or online retailers. You might want to research all potential options you can afford to invest in, look at market trends or try to determine how a company will do in at least a few years’ time based on all available information. For instance, let’s say a country is interested in investing in clean energy, good stocks to look at might be solar companies or companies focused on manufacturing electric cars. The main goal is to pick a company that has a secure future – although nothing is 100% certain.

Diversifying Your Portfolio

When buying stocks, it’s important to invest in a variety of different securities. You don’t want to go all-in with a company like it’s a racehorse. By diversifying your stock portfolio, you can minimize your risk. If you only have a little invested in a company that doesn’t go the way you expected in terms of the market, you may still have other investments that are doing well to counterbalance that loss. Stockbrokers like Fidelity can help you create a diverse portfolio of stocks and meet investment goals. They can also help you manage them if you feel overwhelmed.

Last Updated: January 19, 2022