How Do I Buy Stocks And Shares?
A Four Step Guide For Beginners Wanting To Learn About Stocks
Asking how do I buy stocks is the first step into becoming more enlightened on this crazy path of stock trading for beginners.
For many people the thought of buying into stocks and shares is incredibly daunting but for those with strong hearts and courage, buying your first stock is easier and quicker than it’s ever been before (although there are still some inherent risks associated with this method of making money).
If this is the first time you are looking into doing this, and consider yourself a first time investor, then you will need to thoroughly prepare yourself both mentally and academically (i.e. studying and learning) for the journey into the volatile markets before you go diving straight in.
Now I appreciate you may be quite excited at the prospect of easy money, or the fact that once an investment has been chosen and purchased you just sit back and see if your decision making was all good, and this is all positive, but if you really are asking “how do I buy stocks online” then hold back on those tingly feelings and realise that things can be equally devastating.
This introductory beginners article basically explains everything in four easy to follow steps to help you get going – sound ok?
You are going to learn about stocks, how to own a part of a stock, selecting the right stock, and finally through to making the transaction itself.
Back in the olden stuffy days you would have needed access to a stockbroker and a reputable printed paper to advise on stock picks, but these days there is a huge plethora of informative fully loaded websites that can give as much information as you will ever need.
(In fact it can be a minefield knowing which one is best, but that’s another story!)
How do I buy stocks tip: There is also a huge range of websites that claim to know everything but sadly are misinformed too, so beware is the motto of the day!
They are often well written, professionally produced and look really slick – so they often do convince people they are genuine, this is why it’s important that you really understand and know where to begin and start. Learning how to buy stocks online is a journey you need to start walking down in as safe a manner as possible.
Step 1: Begin By Selecting Your Stocks
How Do I Buy Stocks?
You have to start by doing your research, and begin by buying stocks once your research has been undertaken into the correct stocks and shares to buy.
How do I buy stocks HOT tip: The first rule is to remember this magical phrase: there is no such thing as a sure bet.
Honestly.
As a beginner asking “How do I buy stocks”, you will be overloaded with people, websites and newsletters all claiming that the next best stock pick is the one they have got information on.
Only a very few totally unbiased, and reliable sources and publications really exist.
The Wall Street Journal is probably the only major source that is widely respected and trusted for market news and analysis. From professionals to beginners asking “How do I buy stocks and shares” it’s very useful. In the United Kingdom, the Financial Times is the most respected.
Another well known website is called the Motley Fool and a lot of budding investors enjoy using the site due to the fact it’s unbiased and believes most investors are capable of making their own decisions – probably a wise move! This is a good resource.
How do I buy stocks tip: Visit Stockscouter – a service offered by MSN money. It’s a regular financial blog that can rank various stocks for you, identify top ones and even runs an ongoing portfolio that you can trade along to if you wish.
How do I buy stocks tip: Keep your ears and eyes open for new trends. Often when banks have big news, or new companies come out with innovative products their stock prices can change dramatically one way or another.
How do I buy stocks tip: It’s worth using services like Google news to keep up to date. You can set up a Google news alert which will send you an email whenever an article or news item comes in relating to whatever phrase you type in to the alert system. This is a great source.
Step 2: It’s Time To Analyse Your Stocks
Learning how to analyze your stocks is the next vital step, and is probably one of the most important learning curves for anyone asking "How do I buy stocks?"
Yep, this is the section that requires some effort and due diligence on your behalf. If you are asking “How do I buy stocks?” then I understand you would rather have the easy way, but there is no quick way to profits. This is where the hard work begins.
The real road to profits is laid out for those who are prepared to grab the bull by the horns.
So, you should by now have picked out 2 or 3 possible choices.
Now that there is the possibility of you investing some of your own money, I hope you can stay motivated enough to ensure you do proper and thorough research.
You can do your own analysis, which is the best option (as it teaches you more about it) or you can rely on third party analysis to be undertaken, and hope for the best.
You can actually combine both of them to come to your own decision later on. For now though I’d recommend you do your own analysis and then compare your findings with those of others.
Initially I’d suggest you make some additional reading a high priority.
Take a look at an introductory guide written on the motley fool website or use the Yahoo! Finance stock tracking service which again, is a better way of learning.
How To Own A Part Of A Stock (a “how do I buy stocks” hot tip!)
Go to the Yahoo! Finance website, and enter the company name in the field labeled “Get Quotes”.
Write down the stock ticker symbol, a 4 letter abbreviation.
Write down the price of one share of this stock. Its current price will be listed as “Last Trade”.
Looking at this stock price, you can use this to work out if it is a suitable stock to work into your own personal budget.
You don’t want to buy stocks at $40 each when you only have $30 to invest, for example.
If you look at the change field you can see how much it lost or gained on this trading day.
Click on the chart or graph on the right hand side. You can then take a look at the chart to get a visual picture of what the stock has done on this day. The chart also has options at the bottom to review this stock over different time periods. For instance, is the stock on its way down or up?
How do I buy stocks tip: Be sure to take a good note of the stock’s one year “target estimate” (which is displayed as: 1y Target Est. on the bottom left).
This figure reflects the price of individual stocks, as projected by market analysts, for one share, one year from now. Please remember though that this is not always accurate, and is based on a mathematically predicted
value. Market analysts can often be wrong!
The “Price/Earnings ratio” (displayed as: P/E)
How do I buy stocks tip: The P/E ratio is another tool you can use to help gauge what is worthy of investing in compared to what is not. It’s used to project the possible earning potential of shares in your chosen stock. In other words it’s a sort of estimate of its “bang for the buck” based on its current market price shown.
If your stock is showing a high P/E ratio, it is suggesting that investors are expecting higher growth in the future compared to companies displaying a lower P/E ratio.
Reading Third-Party Stock Analyses
How do I buy stocks tip: As mentioned earlier, it is vital that you actually get yourself immersed and refer to other peoples opinions as an after-thought that may aid you in a final purchase decision. Refer to the main places that people trust in, like the Wall Street Journal, the Financial Times etc., and a few reputable online sources like Forbes etc.
Step 3: Decide How to Invest
The hardest part, and where all the brains is, is when you are deciding how to invest. Paper trade if you have to, until you are ready, and making good decisions.
You can choose to invest direct with the company or through a broker. There are two types of broker – a full service broker and a discount broker. As long as you stick to trusted sources you will be ok. Sometimes, sadly, there are some unscrupulous companies out there who claim to be brokers, and are actually scam artists who will gladly take your money and not even invest it!
Full Service Brokerage
How do I buy stocks tip: This is the easiest hands-off option that anyone could undertake, but be warned, it costs money and can be expensive! Its suitable if you have little time and a lot of money to invest. You will get professional personal brokers assigned to deal with your money and do all they can to grow it for you. The will often advise and help with many other financial items too.
Sadly though it’s likely that you will pay often $150 or so per transaction so choose wisely! Plus the brokers are often on a commission basis, so sometimes their advice could be biased if it means they will earn more money out of the deal.
Just look on Yahoo’s directory listings or search for recommended services in printed publications or from reputable sources.
Discount Brokerage
Basically these are simplistic brokers like Scotttrade who offer written advice articles and the ability to buy and trade yourself.
You will also be given access to various software tools designed to assist you. At the end of the day, the better their service is to you, the more likely you are to stay using them, so they make more in the long term.
Competition for your business between discounted brokers is fierce!
You will save money per transaction as their commissions are very small in comparison to a full service broker. Also the minimum amount needed to invest is also smaller. Great for most people who want to learn it all for themselves!
The downside is that of course, you really need to ensure you are at the top of your game, and set up systems to ensure your money is protected.
Having A Direct Investment Plan
How do I buy stocks tip: As mentioned earlier, you could invest directly with businesses, but it is quite rare to do so now. Relatively few companies offer this option and very few investors know about it.
The good points are that your transaction costs are going to be very cheap, as there is no “middle man” or broker to take their cut.
The downside is that hardly any companies do this, and this could impose limits on your ability to pick good stocks.
Step 4: Invest
How do I buy stocks online? This is when you take those brave steps to your investment.
Well hopefully by now you’ve done ALL your research. I mean it. If you haven’t then don’t make any rash decisions. If you are still asking, and wondering “How do I buy stocks?” then keep on learning and trying various investment strategies.
Countless people have literally wiped out their savings overnight when making poor decisions.
How do I buy stocks tip: If you’re still not sure then study more before you invest. Paper trade – i.e. make pretend trades and track how much you would have made. This is always an eye opener, and often proves how things can go wrong!
Invest only 5% of your allocated money, and try it for 2-3 months before investing any more. This way, as your confidence increases you can increase your funding.
Why wipe out 100% of your money when you can get away with wiping out just 5% if your decision was wrong? It is important that you do as much as you can to help you learn about stocks before you jump in.
How do I buy stocks tip: For an incredibly good guide / system to follow, I recommend you take a closer look at System Pro Trading Stocks e-Course & Video Series. They have got an enviable profit record and I think the information will be a useful addition in your quest to financial security. I have been subscribed to the emails they send out and they are very thorough and almost daily with tips for new stocks to watch, as well as predicting the possibilities. They even include graphs to help you understand what they are talking about. This is one great way for you to learn about stocks and shares if you want. If you are still asking yourself “how do I buy stock” then this course really is for you.
Filed under How Do I Buy Stock by on May 19th, 2010. 8 Comments. 
How Do I Buy Stock? What do I do?
Stock Investing Basics For People Like Us (A guide for people like us!)
How do I get started then in the buying of stock? Well actually it’s a lot easier than you think these days. If you are new to the world of stock buying and are asking yourself “how do I buy stock” then it’s just a basic case of undertaking some stock investing advice before going on to open up a stock brokerage account.
If you are askling "How do I buy stock" then be sure to learn as much as you can. There are some great primers on this site.
You simply open up the account and deposit the funds you intend to use for your investing.
There are many of these stock brokers available that you can find listed in reputable newspapers and on financial websites around the world.
Key point: It is strongly recommended you find a review of any potential stockbroker you are looking to utilize for your trading needs as sadly there are many unscrupulous companies who list themselves as stockbrokers, take your money and never even buy the stocks.
You can also look on comparison websites when wondering “how do I buy stock, shares and options”, etc. and find the ones that come highly rated.
Key point: It is recommended that initially, and ideally for at least 3 months that you undertake pretend trades only. This is called paper trading. So pretend to buy a stock but do not go ahead and buy that stock.
This is because there are literally hundreds of things that can affect the price of a stock, and it is easy to wipe out vast chunks of your money, even overnight if that stock price takes a nosedive.
Steer away from tip sheets, hot tips, and low priced shares that are being recommended on websites, newsletters and friends. Generally these will end up costing you a whole lot more in the long run.
If you don’t have the confidence in your own choices, then you could easily opt to let someone else make all the decisions for you. There are investment trusts, unit trusts etc out there that are managed by experienced investors. The downside is that the management fees will be higher, but the likelihood of long term success is higher too. You get what you pay for, a lot of the time. Learn more about how to own a part of a stock if you are asking yourself “how do I buy stock?”.
Just How Do I Buy Stock Units?
Don’t ever make rushed decisions if you are asking “How do I buy stock”. If something seems fantastic then it may just be too good to be missed. Every new day will always bring about it’s own set of opportunities that you can look at.
Key point: You can buy as many or as few stocks as you like but each purchase will carry a fee often around the £10 ($14) mark.
So if you were to invest in stocks that only cost £1 ($1.30) each and you buy 10 of them, you are likely to end up paying almost double what your funds were because of the fees involved.
This is why you will often see many investors trade with hundreds or thousands at a time.
It is not really possible to buy stocks that have no commissions attached to them, so if someone says they can do this for you, keep well away as it is likely to be a scam.
Key point: You can go for execution only trades which are normally less expensive on the fees but then again these will come without any advice whatsoever.
You may be able to go for a self-select ISA to avoid some fee’s but these can again come with annual fees instead.
Look towards established financial institutions for the best advice when it comes to these matters, such as the London Stock Exchange for example and you will be off to a great start.
If you are still wondering how do I buy stock, then system pro trading stock market e-coursemight be the best thing you ever take a look at. We highly recommend this course if you are thinking about trying this out yourself.
No matter what the issues, if you are at the stage where you are still asking questions such as “How do I buy stock” then please read the items on this website – you won’t be disappointed.
Filed under How Do I Buy Stock by on Mar 4th, 2010. Comment.
