How to Buy and Sell a Stock

Buying and selling shares requires groundwork and reflection on your risk appetite for investing in the stock market.

Buying & Selling Stocks

The question ‘how to buy stock’ is easier to answer now than it was 20 years ago. The reason is that buying and selling shares is more stress-free nowadays, mostly due to inexpensive internet trading and adequate facilities to manage and maintain your portfolio on the internet. Nevertheless, there is still room for improvement.

During the course of this brief article, we will guide you on how to buy stock.

Objectives

Firstly, it is important to agree on your investment objectives, whether you want to produce income or yield capital growth. Stock that pays a large dividend is inclined to provide income, whereas fast-growing companies might produce capital growth, that being said, it mostly depends on what you want to achieve. This article will answer these questions and show you how to buy shares and how to invest in stocks.

Risk

Next, it would be best advised to reflect on how much of a risk you are willing to take. The biggest risk would essentially be losing all of your capital investment in the stock markets. If you don’t like taking risks, especially with your own funds, the stock market is not for you. Higher yields are normally allied with higher-risk stocks and lower yields with lower risk stocks. The ‘blue chips’ shares; those in FTSE 100 companies are inclined to be less volatile than fast-growing, riskier corporation’s stocks, which could hence produce higher earnings. Investors would be suggested to try to build a comprehensive, diversified stock portfolio that offsets high-risk investments with low-risk ones.

Venue

If you’re currently considering to invest in stocks & shares, the best way is to do so through a traditional stockbroker or an online broker. You will be expected to pay commissions and stamp duty on share dealings for investments in stocks and shares but not for investments in stock indexes.

Whether you use a traditional stockbroker or an online broker, the terms of your investment mostly depend on you and the decisions you plan on making. Buying stocks and shares online is a much less expensive way of investing in the stock market; however, if you do end up using a traditional stockbroker, you may be able to receive useful advice from an investment advisor, that is if you are willing to pay higher fees.

Rather than actively manage your own portfolio and track the markets as well as learn how to pick shares yourself, you might also want to invest in a stock fund. Stock funds invest in a combination of asset classes, such as individual company stocks. Investing in a stock fund would enable you to spend less time in actively managing your portfolio.

Research

One crucial rule to follow is not to purchase stocks through a friend’s recommendation or even a newspaper’s recommendation. You should make your own judgments. It would be best to take one step at a time at your own pace. It can be appealing to trade frequently, albeit, it is probably best not to trade so frequently as you are probably likely to lose your money.

A little reminder is that you are obliged to pay fees every time you buy or sell stocks and fees, which then cuts into the potential returns on your investments.

Investment periodicals and books can offer advice and ideas on how to pick and value shares. You can also practice your new-found skills by simulated trading through an imaginary share portfolio online before you use your own money and buy shares for real. All online brokers and other investment sites offer this facility for free.

Care

If you see your share prices falling, don’t fret. Share prices are always rising and falling, so it would probably be better to prepare yourself to invest long term( five to ten years) and as mentioned in other articles, I would suggest to never use money that you need to pay bills with, as investment capital.