Investing in the stock market is one of the best ways to build wealth over a long period of time. While trading shares of stock often is extremely risky and should only be done by experienced traders, buying into a diverse selection of stocks or mutual funds with the intention of staying invested for 10 years or more is a way that average investors can earn a respectable return for their money.
Determine the stock you wish to purchase, how much you wish to buy, and make sure you have the money to buy them. You should research the company you plan to invest in carefully before committing money; as investing guru Warren Buffet has said, he doesn't like investing in high tech companies because he wants to keep his money in businesses he understands.
Find a broker. Other than in a public offering, where a company sells stock directly to the public, or a specific request for more shares by a shareholder, you will need a broker to buy shares of stock. Using human stockbrokers is the most effective way to trade quickly and receive direct communication about trading, but for private parties without a lot of resources, using a discount broker, such as an online trading site, is often the easiest way to trade while limiting fees.
Use your broker to place a trade into the stock you want. Simply ask your stockbroker to buy whatever number of shares you want, and provide him the money to make the trade. If you are using a discount online broker, use the funds in your account to purchase your desired stock.
After you own shares in a company it is possible to buy more shares by directly contacting the company without using a broker.
- Mutual funds are investments comprised of many stock holdings which automatically give some level of diversification. These funds are recommended for long term borrowers that wish to prevent risk.
- Discount online brokers allow private parties to buy stock with minimal transaction fees.
Gregory Hamel has been a writer since September 2008 and has also authored three novels. He has a Bachelor of Arts in economics from St. Olaf College. Hamel maintains a blog focused on massive open online courses and computer programming.