How To Buy Stocks And Shares
Knowing how to buy stocks and shares is the key to cultivating an investment portfolio. Historically speaking, the stock market has offered investors a 10% financial return on average. Investment expert Michael Sivy suggests that a balanced stock portfolio contains fifteen to twenty stocks that are spread between at least seven different industries. In order to purchase shares from the over 6000 publicly traded companies, you have three options: hire a full-service broker, a discount broker or an online broker. By comparing the differences between these three stock broker options, you can decide upon the most practical means for buying stocks and shares.
To buy stocks and shares you will need:
- Financial goals
- Internet Access
- Online brokers. We will begin with the cheapest method of buying shares and stocks -- online brokers. Brokerage firms, such as Ameritrade, offer you the ability to make stock purchases at a lower transaction rate. But, it will not be their responsibility to make suggestions and provide advisement -- that will be your job. This is ideal for investors with a decent amount of knowledge about the stock market, or individuals with a knack for research.
- Discount brokers. Next up the ladder we have discount brokers, such as Fidelity and Charles Schwab, that trade stock for their customers at a cost that generally falls between online and full-service brokers. On average, discount brokers will charge about one-third of the rate that their full-service counterparts would offer. When placing orders for stocks and shares, you will be asked if it will be a market order or a limit order. A market order simply means you are willing to purchase your shares at whatever happens to be the current price. And, limit orders will allow you to choose a price limit, and your stock will not be purchased until shares drop to your chosen price. Limit orders can be left open for one day, or indefinitely.
- Full-service brokers. When you don't want to bother yourself with up-to-the-moment investment research, and you prefer to pay more for an expert opinion, full-service brokers become your ideal option. As they say, "You get what you pay for." Being that full-service brokers, such as Merrill Lynch, work on a commission that is based on a percentage of your purchase or sale price, they face an added incentive to see you succeed. Full-service brokers will offer you the wealth of their vast information about which stocks and shares are hot.
Regardless of which method you choose to buy your shares and stocks with, the best way to take advantage of this investment's potential is to be in it for the long haul. The only investors that make a ton of money fast are those buying an unimaginable amount of stock that just happens to rise in value in a matter days, or minutes for that matter. Keep your personal financial goals at the center of your decision-making process while buying stocks and shares, and you too will be among those with a lump sum to supplement your income with.