How to Buy Stocks – A Complete Beginner's Guide

Pick a stock much like a car. When you buy a car, you can not just go with the first right color – you need to know it. You want to check under the hood, or at least kick the tires. If you do not know the car, you bring your brother or your dad or who does it. Most importantly, you spend time. If you do not know the mileage or exhaust sound, you pass it on, waiting for a better deal. When you choose the stock is no different.

The first thing you need before you buy a company stock is the stock trading account. To do this, you need a proxy. If it is your first time, I recommend using a discount broker. This type of broker will process your buy and sell orders, as well as some others. Where do you find stock brokers? Try your bank. There may be other less expensive options, but your bank is a place you feel comfortable and you know how it works. There may be, if you have an account, they can help you easily start the stock trading account at low cost. I use online banking to trade stocks.

For your first purchase, you want to buy what you know. Take a look at the 3 companies that you like – the company you bought the thing or the person that knows. Pick up a newspaper and write down these four things:

  • Price – If the stock is $ 500 One piece you might want to skip this one now.
  • – This is how much the stock value has increased last year, which is pretty good that the company will try to beat this year.

  • – This is the percentage of the value of each share paid by the Company to its shareholders each year. Some stocks do not pay dividends, but make up for more growth (if the company does not pay its shareholders, it can spend that money to make the company more valuable).
  • – This is just the price of the stock divided by how much the company makes in the current financial year. Price / earnings (PE) This figure may be misleading because the current stage of the fiscal year, but the essentially low price / earnings ratio means how much the company's stock is important to the company is doing.

This or the stock is undervalued and can now be routed through the roof any day. If the ratio is high, it means that the company has many expected growth, but the actual profit is very small. This was common during the "Internet bubble" when the company had great prospects but had not made any money.

Once you have these, it's time to look at some charts. Go to the company's Web site and click Investor Relations. Download everything, look at their share price and dividend payments in the past year, 3 years and 5 years. Read the newspaper. Not the front desk, behind the boring bit about money. Most of these articles are easy to read, and reading them for a few weeks will give you a good idea of ​​what is happening in a high-finance world.

Selecting stocks is not just about companies. It's about knowing the world will affect the company. Now is the time to decide on your goal to do a buy case. First, write the investment you want. Do you want to build more than 10 years of capital, or do you want to double the amount of money in a year, but have lost half of the risk? If you are the former, then you are a growth investor. Otherwise you are a value investor. You may be in between, but since this is the first purchase, it will be a good exercise to pick stocks based on a rigorous investment philosophy.