Step-by-Step Guide to Purchase Stocks

Buying stocks can help you reap benefits and provides for additional income over time. While it takes a little effort to understand the jargon and research the market, it isn’t nearly as complicated you’d think. Here’s our beginner’s guide to purchasing stocks.

Choose a Stockbroker Online

With a choice of several online stockbrokers, opening a brokerage account is relatively simple and takes just a few minutes. After filling the online application that includes submitting proof of identification, you can choose to transfer funds electronically or via a check.

Do Your Homework

To be successful with stocks, it is essential to research various companies in the market to find the most profitable ones. The next step is studying the company’s finances. A company’s annual letter to shareholders gives you an insight into the business and helps you understand the number-heavy data better. Your broker’s websites will also have several helpful tools that help you evaluate the business.

Choose a Figure

When investing in stocks initially, it’s perfectly fine to start small. By purchasing a few or even a single share, you can get a feel of owning stocks without the risk of losing large amounts. Some brokers even offer the option to buy fractional shares, which is ideal when purchasing expensive shares with a limited budget.

Take Time to Understand the Terminology

There are several order types available on your trading page. A different term denotes each, and the common ones include:

Ask price: This is the price that sellers will accept for the stock.

Bid: The price that a seller is willing to pay for the stock.

Market order: A buy or sell request at the best current price.

Limit order: An order in which a stock is sold or bought at a specific price.

Stop-loss: A limit at which a market order is executed at the current price.

Diversify Your Portfolio

With the basics in place, it is crucial to diversify your portfolio by adding stocks of various kinds.

We recommend consulting with your financial advisor before investing in the stock market. With some dedication and research, you’ll soon be on your way to many years of investment success.