When purchasing individual stock from a company, you are essentially becoming an owner of that company. This means that if the company performs well, you will earn money on your investment. If the company performs poorly, however, you will see a decline in earnings. Investing in the stock market is risky, but it can yield large profits if you remain educated and aware of how a company performs from quarter to quarter. As a stockholder, you can sell or buy additional stock at any time.
1. Open a brokerage account with a reputable brokerage or online stock trading company. Evaluate traditional brokerage houses and online trading companies by visiting corporate websites, reviewing customer testimonials and verifying business status with the Better Business Bureau. Contact companies to speak with a customer service representative to answer questions you have about opening an account, buying and selling procedures and commission rates. Request additional information about products and services as necessary.
2. Create a list of potential companies to invest with. Select companies based on industry, popularity, yearly earnings, types of goods and services or brand-name recognition. Request or download annual reports and quarterly stock earnings from company websites to learn as much as possible about a company's financial health. Research stock prices using stock indexes found online or in your local newspaper. Narrow your list to include companies that have the most potential to yield a profit.
3. Place a stock order with your broker or use the online tools provided by the online stock trading company to place the order yourself. Select the company stock and number of shares to purchase. Place either a market order or limit order. A market order means you want to buy stock for the price at which it is currently trading. A limit order means you want to wait until the stock drops to a specific price before you invest. When the stock drops to that price, your stock order will be placed.
4. Monitor your stock. Review stock indexes daily to see price fluctuations. Determine the best course of action -- sell, buy more stock or hold to see if the stock will improve over time.
- Determine how much you feel comfortable in investing before opening a brokerage account.
- Compare the commission rates of several brokerage houses or online trading companies before settling on a particular company.
- Carefully consider the financial risks of investing in the stock market before making any financial decisions.
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