how to buy shares in a company

How to Buy Shares in a Company

Owning shares of a company is one of the notable forms of long-term investments. It entitles you to a share of the company's profit and losses.

 

In this age where you can do almost everything online, buying shares have also become relatively simple. However, that is if you know how to buy shares in a company. And here we've shared how to buy shares in a company, step by step.

#1. Choose a Company or Companies to Invest in.

The first step in the list of how to buy shares in a company is to find the company or companies you want to invest in. Especially for newbies, it is advisable to start with a business sector you're familiar with.

 

Also, it is important to look out for companies that are performing well and have a good potential for growth in the future. To understand these, you should study the company's financial reports and consider what news reports have to say about the company.

#2. Check for Direct Investment Option

Buying the shares directly from the company rather than going through a broker, is a low-cost option for stock investment. Buying shares through brokers often costs more due to brokerage fees and commissions.

 

However, when you are buying directly you just need to visit the company's website to find the company information in detail and sign up straight up.

#3. Open a Brokerage Account

This third step in how to buy shares in a company is necessary if you choose to buy shares through a broker. It also becomes necessary if the company doesn't offer direct investment. A brokerage acts as a middleman between you and the company and manages your investment for you.

 

There are many brokers online to help you get started. Online broker services are usually easy to use and are cheaper options. Some of them offer discounts and commission-free trades.

#4. Place an Order

Once you've chosen a broker you want to work with and opened an account, the next step is to place your order. You can choose a specific amount of shares you want to buy or go with as much as the money you're trading with can buy.

 

It is important to note that stock prices are barely steady. As a result, the price at which you'll buy the shares is dependent on the price as at the time your broker executes the order. Alternatively, you can set the maximum price you're willing to pay.

#5. Track the Performance of Your Investments.

After you've purchased your shares, you need an eye on the performance of the company to know when to sell your stock.

 

To know the performance of the stock you should follow general economic and financial news, and stock market news. If there are other sources of information that are related to the company, do well to keep tabs on them. Also, compare your stock's performance to a sector index.

Bottom Line

The knowledge of how to buy shares in a company is the basic knowledge you need to get started with stock investment. And, you have two choices; buying shares directly from the company or via a broker.