Is it the right time to invest in the stock market? Do you know what stocks you may want to buy? How do you even go about buying stocks? Some people live off In this article, we show you how to purchase your first stock with a simple guide to stock investing. We present 6 steps to buying your first stock. 

1. Create an account with a brokerage: 

To purchase stock, you must first have a brokerage account. When choosing an online stock brokerage, you should consider certain important factors. Does the company provide all the services you need? Some brokerages have excellent teaching materials for new investors. Some equally offer analytical tools and stock research while others only have physical locations where you can get advice. Certain online brokerages have other options such as buying fractional shares or foreign stocks. Meanwhile, other investors may be looking for a simple tool to buy and sell stocks. The platform should be intuitive and simple to use and accessing your trades via smartphones could facilitate trading decisions. Try a few trading platforms first before deciding on the one you like. 

2. Decide which stocks you want to buy

We won't delve too further into the different approaches to studying and choosing which particular stocks to buy. However, there are a few guidelines to follow to ensure that you purchase the right stock. 

Adopt a buy-and-hold approach

Invest in equities because you think the companies that support them will be worth more in the future than they are now. If you think a stock will do well in the coming weeks or months, don't buy it. Furthermore, it is advisable to leave day trading—the act of purchasing and selling stocks on the same day—to the experts.

Spread out your holdings

Avoid investing all of your capital in just one or two stocks. Purchasing a few shares of several stocks will help diversify your portfolio, even if you are starting with a relatively small initial investment. Owning stocks in numerous different companies doesn't cost anymore when trading commission-free. Furthermore, a lot of brokers provide fractional share investing, which enables you to purchase shares of multiple companies for a comparatively small sum of money. You may want to consider this if you are interested in diversifying your portfolio. 

3. Decide how many shares to buy

Decide how much money you want to invest in each stock that piques your interest, then divide that amount by the stock's current share price to find out how many shares you should purchase. On the portal of your brokerage, you may look up stock prices by typing in the name of the firm or the ticker symbol of the stock.

However, fractional shares can be purchased or sold through certain brokerages. You can buy any dollar quantity of stock, regardless of its share price, if your brokerage deals in fractional shares. You have to figure out how many shares you can purchase by rounding down to the next whole number if your broker doesn't.

4. Choose an order type

Purchase orders for stocks come in a variety of forms. The circumstances under which you want your broker to finalize your transaction are specified in the kind of order you submit to purchase stock. The ideal order type for buy-and-hold investors is usually a market order, which directs your broker to purchase the stock right away at the best price.

However, you might choose to submit a limit order. This lets your broker know the highest amount you're willing to spend on a stock. As an illustration, suppose that the current price of a stock is $20.50 per share. You put in a limit order because you want to buy it only if the price is under $20. Then and only then, if the stock price falls below $20, does your broker purchase shares on your behalf?

5. Place the stock order with your brokerage

Navigate to the relevant part of your brokerage's platform and fill out the necessary information to place a stock order. Usually, your brokerage will want to know if you intend to buy or sell shares in addition to the company name or stock ticker. You will enter the desired purchase amount in dollars or the quantity of shares you wish to purchase.

Your stock purchase should be completed in a matter of seconds (assuming that the order type is a market order) after you press the "place order" button. As soon as you buy shares, your portfolio should update to reflect your ownership of those shares.

6. Build your portfolio

Developing your investing portfolio is the last phase in this procedure. You can maintain funding your brokerage account and invest in equities you hope to hold for years to come now that you have one and understand the fundamentals of buying and selling stocks. Finally, it can be tempting to track the performance of your stocks daily, especially in the beginning. But it's critical to have an eye toward long-term investing. It is recommended that you read the quarterly reports and sign up for news alerts. However, if the price of your stocks starts to fall, don't panic and sell. Also, if the price of your stocks increases by a few dollars, fight the impulse to sell. Investing in outstanding firms and holding onto your shares for as long as the company stays great is the finest and easiest strategy to accumulate wealth over time.

Don't pass up this second opportunity at a possibly profitable situation

Have you ever felt that you should have bought more of the most successful stocks? At Stock Piper, we provide you with the best selection of stocks that are listed on the ASX. Stay up to date with useful articles that can inform your investment decisions.