Buying shares is not as complicated as it may seem, but you need to understand the process before making your first investment. You will need to first open a brokerage account, add money to the account, and select the companies to invest in. The key steps to follow are as follows:
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Select an Online Broker
The first step in buying shares is finding a good online stockbroker. Once you open the account with the broker, you will need to fund it to start buying shares. In fact, buying shares through the broker’s website is simple and takes only a matter of minutes. You may also choose to use a full-service stockbroker or consider buying shares directly from the company.
After funding your brokerage account, you now need to start picking the shares to buy. Take time to research companies that you already know or have a direct consumer experience. Look for the companies you would like to be part of the owners. Check on the performance of these companies, analyze their annual reports, and get a general view of the risk of investing in the company.
Before trading with your own money, consider paper trading where you learn to buy and sell shares using play money. You do not have to feel pressure to fill your entire portfolio with stock or buy a certain number of shares. Learn how the process works, and slowly build your portfolio. Starting small and slow also protects you from high risks, and allows you to learn more about the market.
Choose Stock Order Type
The numbers and word combinations on the broker’s online order page can be intimidating to new investors. Some of the terms you need to understand include ask, bid, market order, spread, limit order, and stop-loss/take-profit order. Understand how each order type, when to use, and the outcomes to expect.
Optimize Your Stock Portfolio
Once you have understood the process of buying shares, it’s time to now build your stock portfolio. A portfolio allows you to minimize the risk of your investment. A good portfolio will include both performing and struggling shares, but the overall value will remain high.
Buying shares is not as difficult as most people tend to think. While deciding when and which shares to invest in, you learn as you buy shares. Choosing a good brokerage firm is the first step to the success of your investment journey.
