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How to easily buy stocks
How to buy a stock
After much deliberations and deciding to take a bold step by investing in stocks, the last thing you want to do is make your trading journey stressful.
If you google how to easily buy stocks online, you will be flooded with tons of information and guides on how to go about buying your first stock. While some of the information you will find online are not far off from the truth, you must also realize that buying stocks is not so much of a Herculean task as many people make it seem.
Yes, you have to research the stocks you want to buy, plan your trades — entry and exit strategy, and be on standby for the right opportunity to execute your trades. All of these are part of the process and if you equip yourself with adequate knowledge about trading stocks, it’s only a matter of time until it becomes a part of you and you will climb up the ladder to become a pro stock day trader.
How to buy stocks
While making research on how stocks day trading works, the chances are that you will have come across day traders, while discussing how to easily buy stocks, mention fancy or high-performance computers, the need to get multiple monitors and scanners, among other equipment or tools you need as to get started day trading.
Getting these tools will undoubtedly make your trading journey smooth. However, you must not get all of them at one go, especially when you are just trying to learn the ropes about buying stocks.
What is the easiest way to buy stocks?
Like every other facet of human endeavor, there are processes one must follow to become successful. And buying stocks is not exempted. First, you need to open an account or signup with a reliable broker such as WeBull or E-trade. WeBull offers two free stocks when you deposit $100. As such, making it a good starting point for first-timers.
Picking an investment
Having decided on the broker you want to trade with, like virtually every stock day trader, your next concern is deciding whether to go for index funds or buy stocks individually.
If you are looking to buy stocks easily, you should consider opting for index funds. Virtually every investor invests in index funds.
Opting for an index fund means that you are investing in a “basket” of US or international stocks including but not limited to bonds. While you are at it, you are not just going to throw your money on any stocks that catch your eyes.
The idea is to invest in stocks that offer more market coverage. For instance, investing in a US stock market index fund means that you have investments across a broad list of public US companies.
Investing in index funds offers stock traders or investors an opportunity to rack up ample gains from the stock market.
The stock market is said to have an annual growth rate of 8%. With that figure at the back of your mind, you can imagine the profitability margin between a trader who invested in one stock and another with diverse portfolios.
What are the advantages of index funds over individual stocks or portfolios?
In addition to being cheaper (because of their low fees), they also offer better returns and are less risky because the stocks are drawn from across the entire market instead of a few companies.
As a trader, you already know that the market has a mind of its own. And because one cannot be one hundred percent sure where the markets will swing, professional traders advise that you put 90% of your investment on index funds before thinking of investing your money in individual stocks.
We are moving on!
Having made your choice of broker, it’s important to know what type of broker you are dealing with. Depending on the nature of services they offer, stockbrokers can be categorized into four groups namely online/discount brokers, discount brokers with assistance, full-service brokers, and money managers.
• Online/discount brokers
Recall that stockbrokers are companies that are licensed to purchase securities on your behalf. While some stockbrokers provide simple and affordable services, others provide full services including in-depth financial analysis and recommendations.
Online/discount brokers offer the least services and their primary concern is to take your order and execute trades on your behalf.
They usually don’t have a physical office you can visit and neither do they have financial advisors to guide you or give advice/recommendations on what stocks to should buy.
You can only interact with this kind of broker online and charges are often based on a per-share or per-transaction basis. Making it relatively easy for you to open a trading account with little money.
As we hinted earlier, online/discount brokers don’t offer investment advice or recommendations of any sort. You are entirely on your own but you can get technical support for the online trading system. However, some online brokers offer resources such as website links to research and educational content, which are usually from third-party providers.
So, if you feel confident about being in control of your investments or want to trade without making huge financial commitments, you should look in the direction of these brokers.
• Discount brokers with assistance
As their name implies, these brokers are almost similar to online/discount brokers. The difference is that you have to pay small amounts or fees for extra assistance.
And this assistance is no more than a bit of information and resources to help with your investment decision or how to buy stocks easily. You can think of discount brokers as regular discount/online brokers that offer upgradable accounts or services such as in-house research reports and investment tips.
• Full-service brokers
Unless you are new around the block, you should already have an idea of who full-service brokers are. They are your everyday stock brokers — they sit with you to discuss your investment plan and help develop a strategy that will help you achieve your goals.
Full-service brokers take time to know you better — personally and financially. As such, they will request information about your marital status, lifestyle, risk appetite, income, asset, and debt, among other personal and financial information.
In addition to helping you to develop a financial plan so you buy stocks easily and achieve your investment objectives, full-service brokers also help with tax advice, estate planning, budgeting, and retirement planning, and other financial advice.
They offer an all-in-one package and their fees are usually on the high side. However, the amount of service they provide, the stress they take off your shoulders justify and the value you will get justify the cost.
• Money managers
These are skilled investment professionals who help investors manage larger portfolios for a fee. This management fee is usually based on the size of assets under management and not on a per-transaction basis.
Unlike online/discount brokers whose services can available to investors with little capital, money managers are for individuals with substantial income and can afford to pay someone to manage their investments. We are talking about investments or portfolios whose value is more than $100,000 to $250,000 or more.
More recently, there have been talks about Robo-advisors.
What are Robo-advisors?
You can think of Robo-advisors as digital asset managers. They’re algorithmic platforms that automatically help you to manage your portfolio using passive index investing strategies. And contrary to popular misconceptions, they require low minimum balances and they vary in their offerings.
While some Robo-advisors are fully automated, others still require human assistance. Speaking of the maintenance cost, Robo-advisors are available for 0.25% per year of assets under management.
If you are looking for ways to or strategies on how to buy stocks easily, here are five simple steps you should have in your checklist.
- Select an online stockbroker
- Make time to research the stocks you want to busy
- Decide on the number of shares you want to buy
- What is your stock order type (market order which allows you to buy/sell stocks at the best available price or limit orders (where you can request to sell/buy stocks at a specific price).
Last but not least, continually optimize your stock portfolio by exploring other aspects of stock investment such as mutual funds and plan for your retirement.
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