The best financial advice you will ever hear is to have your money work for you. You may become a millionaire by saving money but when you invest in company shares, it acts somewhat of a catalyst.
That is why this guide will be all about that. We will teach you exactly how to buy shares properly. If you are a beginner, you will love this concise and easy guide.
Just buying shares and calling it a day is not enough. You need to buy the right shares. And for what you need to know which shares to buy and also what kind of investor you are.
Know What Kind Of Investor You Are
Before everything else, you first need some self-clarity. Ask yourself what type of investor you are. Some online brokers will ask you about your investment goals. You need to be clear on these.
You might want to be more active in managing. Alternatively, you can also have the ‘set it and forget it’ mindset. Then there is also the conversation around the risks you are willing to take. All investing and buying shares come with a certain level of risk. You need to be sure what kind of risks you are willing to take (and more importantly what kind of risk you can take).
How To Buy Shares Properly?
When it comes to buying shares and investing in stocks, knowing what you are buying and the market is very important. You do not want to go into it blind. That will not help you at all. Here are the things you need to know to buy shares:
Research, Research, and Research
Researching the shares you want to buy is very important. You do not want to buy a share that will not perform well. You have been a consumer as well, right? And that is the right place to start actually.
What company have you had a good experience with? Use that knowledge. You can start by looking into the companies and brand names that you already know and are familiar with. However, you should not let data and the market analysis delude your decision though.
Buying shares of a company essentially makes you part owners of that company. So, think of it like this; which company’s shares would you want to buy as in which company would you love to be part owner of. Of course, you will not be 100% of the company. But you get the idea.
Just deciding on the company names is not enough though. After you have shortlisted them, it is time to dig in a bit deeper. Start with their annual report. You need to pay attention to the numbers here.
Check out the management letter to the shareholders of the company. That will give you a good idea about where the business stands in terms of its financial performance.
Selecting An Online Broker
Honestly, you can choose an online broker before you have researched the companies or after. But what is important is you choose a reputable and experienced one. Working with an online broker is the easiest way to buy shares and stocks.
You will need to open an account first and fund it. Then with most brokers, you will be able to buy shares right from their website as well. Do not worry about this step. At first, it might seem a bit daunting.
But you will soon get pretty comfortable with it when you know the whole process. It is not that difficult. You can also check out RoboMarkets. They have 6 markets and more than 12,000 instruments for trading. More on this a bit later.
Decide On the Number of Shares
A common mistake beginners make is feeling pressured into buying a lot of shares. That is not worth it. You should feel no pressure to buy a large number of shares all at once. To get your feet wet, you can try paper trading.
Paper trading lets you learn trading without using real money. When you are just starting, start very small. You can use tools that convert dollar amounts to share amounts. That will give you a good idea about it.
Choosing Your Share Order Type
Two of the most important order types you need to know are market order and limit orders. Market orders are shares that you indicate of selling at the best market price currently available. These types of shares orders are best for buy and hold investors.
Limit orders give you more control. You have a bit more control over the price at which your trade will be executed. Say a company share is going for $200 per share. However, you feel like the actual price worth is around $150.
Then you can tell your broker to buy it only when the price drops to $150. These are good for buying and selling small company shares.
Portfolio Optimization and Diversification
Optimizing your portfolio is very important if you do not want to end up with all your eggs in one basket. There will be rough patches during your investing journey. That is normal and even the best of the best out there goes through the same.
The key here is diversification and portfolio optimization. You need to invest in a range of assets. This will reduce your risks overall. This is where mutual funds and ETFs come into play. They are somewhat secure and have larger investments within their funds themselves.
RoboMarkets: A Leading Online Broker
RoBoMarkets started its journey in 2012. Since then, we have made a difference when it comes to investing and buying shares. We got many awards and have satisfied many clients and investors. You get an easy-to-use yet robust online broker with us.
The tools are fantastic as well. Things like currency analysis, trading charts, and calculators allow you to buy shares with more confidence. You can get in touch with us here!
There you have it. Now you know all about how to buy shares properly. If you do the basics right, the other things will follow. But for beginners, knowing the basics is important. And having a good online broker like RoboMarkets is important for setting yourself up for success.