What would be your reaction if we told you that you could turn $10,000 to $20,000 within ten years (at 7% yearly gains)? You’d hardly think twice before investing in our scheme, right? Well, TBH, it’s not our scheme but the benefit of investing in the stock market.
Investing in the stock market is probably the fastest way of growing money. However, we won’t say that it’s easy. Before stock shopping, you need to learn about the market and its nuances. Ideally, you first need to set up a brokerage account and add money to it. Once that’s ready, you can follow the below-listed steps and purchase the stocks of your choice (with diligence and expert advice).
So without wasting time, allow us to share some helpful insights related to buying stocks.
Choose an online stockbroker!
The road to owning stocks almost always goes through a stockbroker (unless you’re a pro yourself). Even though you have a private brokerage account, you should try to buy stocks from stockbrokers or the company itself. Stockbrokers are well acquainted with the stock market settings and can guide you with respect to safe purchases. If you don’t know a stockbroker personally, you can find a great one online.
Analyze the stocks you want to buy
When searching for purchasable stocks, one should analyze well-known companies first (well-known here doesn’t mean renowned, but one that you’re aware of). Don’t let “trends” push you into impulsive decisions.
Your motto should be buying stocks of the companies which you want to own in the future. Once you’ve selected such companies, go through their financial reports to get an idea of their position. Documents like the company’s annual report and management’s annual letter to shareholders play a vital role in estimating its financial position.
Decide how many shares to own
In the beginning, don’t worry about purchasing several stocks or filling up your portfolio. Owning several stocks doesn’t prove that you’re rich or genius. Instead, it talks about your interests in the stock market. Beginners should ideally start with buying one or two stocks. They should pay more attention to fractional shares, allowing buying a portion of stock rather than purchasing the whole asset.
Select the type of stock order
The most common types of stock orders are limit orders, market orders, and stop-loss orders. Market orders allow you to buy and sell stocks at the best price in the market. They guarantee your order would be executed but don’t promise the execution price. However, unlike them, Limit orders give you control over the price at which your trade is executed. They’re considered best for selling securities, while market orders are best for buying securities.
Wrapping it up
As they say, the first impression is the last impression. Similarly, your first stock purchase marks the beginning of your investment journey. Even if things don’t turn out as you expect them to, don’t get disheartened because even renowned investors make the silliest mistakes. As long as you grow and diversify your portfolio, such errors are acceptable.