|Learn how to stock Investing buy stocks online for beginners|
Stock Investing Part 1 of 2: Learning about the Stock Market
Buy Stocks online for beginners
1 Learn how the stock market works.
Go to the local library or bookstore and search online to find books and other resources on stock investing.
2 Understand important terms.
There are a number of terms you will hear and read about in researching the stock market and individual stocks that it will be helpful to understand. A few of these are defined for you below.
3 Consider a mutual fund.
Mutual Funds pool the money of many investors to invest in several stocks and/or bonds. When you contribute to a mutual fund, you get a stake in everything the fund invests in. This can be a lower-risk alternative to buying stocks individually.
4 Consider an ETF.
Exchange Traded Funds (ETFs) are similar to mutual funds. Investing in an ETF gives you a stake in a several different assets (e.g. stocks, commodities, or bonds). But, ETFs are bought and sold on the stock exchange like common stocks. This makes them more volatile, but also more liquid.
5 Research some investments.
Research the companies and/or funds you are considering investing in thoroughly before buying any stock. You are making a bet about how well you think a company or fund is going to perform in the future, so the more information you have, safer your bet can be. This process is called "due diligence." Start with online financial sites to get a quick idea of the business and key financial ratios.
6 Develop a strategy.
Before you actually purchase any stocks, it's important to decide what kind of investor you are and what strategy you will pursue. Some common approaches to investing are described below.
7 Watch the market.
Keep an eye on the value of the stocks you are interested purchasing, so you know when to buy stocks, or sell some that you already own.
Stock Investing Part 2 of 2: Making your Investment
1 Investigate the possibility of buying direct.
Some companies offer direct stock purchase plans (DSPPs) that allow you to purchase stock without a broker. If you are only planning to buy a small amount of stock from one or a few companies, this may be your best option, as it saves the time and cost of going through a broker.
2 Choose a broker.
If you can't buy the stock you want to invest in directly, you'll need to find a broker. Brokerage houses vary in how they treat different types (and frequencies) of transactions. This means you'll need to compare your options and choose the one that suits you best. Generally speaking, there are two types of brokers: full service and discount.
3 Open a brokerage account.
Contact a broker about opening an account. Your broker will then require you fill out a form containing personal information that will be used in placing your orders and for tax purposes.
4 Deposit funds.
Send your broker an initial deposit of money that will be used to make your first stock purchase.
5 Enter an order.
A request to your broker to buy stock is known as an "order." Select your stock, notifying your broker of the company's "symbol" (a 1-5-letter code), the number of shares to buy, and the length of time for which your offer will be valid (e.g. single day vs. good till cancelled).
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