Buying shares has changed a lot since the advent of the Internet. There are now more options than ever and it can be overwhelming not knowing where to start. Luckily, we’ve got you covered!
Here’s a step-by-step guide on how to buy shares in a company and what to look for in a share that’s worth buying.
What is a share?
A share is a contractual agreement between a person and a company. A person or broker buys a number of shares from a company, and in return for this investment, the company promises to pay a dividend in the future.
You and the company can agree on how many shares you will buy and when.
What is a dividend?
A dividend is a type of payment that a company gives to its shareholders. Instead of paying you in cash or shares, the company will pay you a certain amount of cash each quarter. Cash usually takes the form of a fixed payment. For example, the same company may pay $10,000 a year to all shareholders of a $1 share.
How to buy shares
Buying shares is exactly what it sounds like: you buy a share of a company, for example, Apple (AAPL).
The important thing to remember is that a share is different from a bond and should not be confused with a share in a mutual fund.
Here are the basic steps you should follow to get started:
1. First, you should conduct an analysis of the stock market.
This will help you with your investment strategy and also give you a good understanding of how much you are earning on your investment.
Next, the most important decision is to choose a Broker that allows you to buy stocks and trade with a demo account, such as Naga, which is not only a broker, but also a Social Trading platform where you can learn directly from professional traders and copy their trades.
We explain what that style of trading is here: What is Copy Trading
Using the demo account is a great tool to test your trading skills with the real market but without risking money.
If your broker allows you to do so, do all your trading on demo for a while, and use it to learn and test strategies.
What to consider when buying a stock
When buying a stock, the first thing to consider is how much risk you are willing to take and how much money you have available to invest.
Some of the most common risks are volatility: How volatile will the stock be? Does it depend on the stock market? Will the stock be affected by macroeconomic events such as a recession? Is it a company with great future prospects? What type of trader are you, and how do you like to trade, long term or short term?
The technology industry is almost the backbone of the economy. With breakthroughs in Artificial Intelligence, blockchain and big data, the influence of technology is set to continue to grow, making the whole world a more connected place.
But overall, businesses will continue to profit regardless of the sector they are in. You just have to decide how and when to start.