How To Buy Stocks: A Step-by-Step Guide

One of the most significant ways to save and grow money is to invest in stocks. However, it’s not very easy to get into stocks. You need to do in-depth research about the stock market so that problems won’t arise in the long run.

Other than that, investing in stocks also requires maintenance to make sure that all of your investments’ performances are constant and stable. That is why getting a lot of information about it is essential and look for a brokerage that can help grow your money.

So, how can you start investing in the stock market?

But, before going to the step-by-step process of investing in other companies, you should know what stocks are first.

What are stocks?

Stocks are shares that large companies sell to other individuals or companies. Once you buy some shares owned by a company, you will become one of its partial owners, even if you only purchased a small amount.

In other words, when that company grows and generates a lot of profit in the long run, the value of your stocks will increase as well.

Owning stocks from companies will allow you to have flexible money-making decisions, too. If you want to generate more income from your shares, you can also sell them once their values go up.

However, investing in the stock market is quite challenging. Since the market has its flexibility, you have to take significant risks as well when investing in this type of venture.

Your shares’ values won’t become stable. One day it can go very high, but there are also times where the market goes down. That is why researching a lot of information about it is necessary. You will be able to know all the risks and how you can profit from it when you have enough knowledge.

How to Buy Stocks?

Here is the step-by-step guide that you can follow when buying stocks:

Step 1: Evaluate your finances and goals.

Before diving into the dangerous world of stock investments, you should consider your investing goals and finances first.

What are your investment goals? Do you have a concrete plan to attain each of them on time? Is it for your retirement? Or you want to try buying shares? No matter what your goals are, make sure that they are clear and attainable.

What about your finances? Do you have enough budget to buy company shares?

It is essential to evaluate this factor as well, so you won’t encounter any financial problems later. If you have ongoing bills or debts, you should take care of them before buying stocks.

You should also evaluate yourself. Can you tolerate the significant risks ahead?

Stock investments are hazardous. If you can’t handle the challenges given by this venture, then your tolerance to risks are quite low. You should be confident and have a positive mindset when buying shares.

Losses are possible, and you won’t be able to predict when it will happen. But, as long as you have the dedication and enough knowledge about how the stock market works, you might be just fine.

You can also talk to a financial advisor if you’re unsure about your decision. They can help you understand the risks better, give recommendations about how you should handle your finances, and offer advice on how you can become successful in this venture.

Step 2: Open an account

Now that you have evaluated your finances and goals, it’s time for you to open a brokerage account.

The first thing to do is to look for a reputable broker. Shop around and do in-depth research on each company. You can also ask your financial advisor about it.

Reliable brokers have a Registered Representative or Series 7 license. Companies with this license are qualified to provide investment advice and management.

Other than that, they are also licensed to sell investment securities to customers. If the stockbroker you’re eyeing doesn’t have this license, then you should look for new candidates.

Proof of identification and some personal information should be provided when opening a brokerage account. Of course, funding is also necessary to buy stocks, so bring enough budget when you open an account.

Step 3: Choose the stocks you want

After opening an account, the next thing to do is to choose the types of stocks you want. This can be the most challenging part because there’s a lot of options to choose from.

To know how much you’ll spend on each stock you buy and which company shares you want to have, you should build a plan and do some research. You will be one of the owners of the company, so you should be knowledgeable enough about it.

Take a look at the value of stocks of each company you’re eyeing. Check their overall performance over the years. By doing this, you will be able to know what you’re going to see when you become one of the owners.

Another thing to consider when choosing stocks is your budget. You should always stick to it, even if it’s very tempting to buy expensive ones.

Step 4: Buy the stocks.

Once you’ve chosen the shares you want, you can now buy it. But how?

There are various ways to buy stocks.

If you are willing to pay for a particular share of a company, you can submit a limit order. For instance, the price of a stock is $50. But, you can only pay $30 for it. You can submit a limit order so that you can still buy the stock. However, the share that you have for the company will only be worth $30.

Another way to buy stocks is by submitting a market order. This is the right choice if you want to buy the best available current market price of a stock. Regardless of its price, a market order can happen right away.

On the other hand, if you find it challenging to decide which type of order to submit, you can get some help from a broker. They will help arrange all of the requirements and provide the right requests for your account.

Step 5: Monitor your investments

Last but not least, you have to monitor all of your investments once everything is in place. Follow your investment strategy.

Other than that, you should also participate in the annual meetings of your partners and gather all the updates you can get about them. Always keep yourself informed and check the stock market regularly.

Final Words

Now that you know the step-by-step guide on how to buy stocks, it will be easier for you to plan and set your investment goals.

Check your finances and do in-depth research about the stock market and the companies you’re eyeing before buying shares. You can also get some help from a broker if you want to make sure that the transactions become smooth all the way.

Buying stocks might look complicated, especially for beginners. But, if you have enough knowledge and a concrete plan, everything will go into place. We wish you good luck with your venture!