How to buy stock in a company: a step-by-step guide

MUW Team

// July 7, 2023

Financial education, What it means to buy a company's stock

Introduction

If you’re new to the world of stocks, it can seem like an intimidating and confusing process. However, with a little research and preparation, buying stocks is much easier than you might think. In this step-by-step guide on how to buy stock in a company, we’ll show you exactly what you need to do before buying your first share. We’ll cover everything from choosing a broker to funding your account and placing your first trade — so let’s get started!

What is stock?

Stock is a share of ownership in a company. When you buy stock, you’re buying part ownership of the company and its future profits.

When you buy stock in a company, it’s called investing in that company. If your investment does well and grows over time, then you can sell your shares for more than what they were worth when you bought them–and keep all those profits! This is why so many people invest: because there are lots of ways to make money from doing so.

Some people even use their stocks as collateral when they need loans from banks; this is called “pledging” or “mortgaging” stock (the word mortgage comes from Latin). The bank knows that if anything goes wrong with paying back their loaned funds then they’ll get first dibs on whatever property or assets are being used as collateral before anyone else gets access to them–which means that banks won’t lend money unless they know exactly what kind of collateral is being offered up against possible losses incurred by loaning out cash upfront without any guarantee whatsoever!

How to buy stocks

Buying stocks is a simple process, but it’s important to understand the basics before you jump in.

A stock is simply a share of ownership in a company. When you buy stock in a company, you’re buying part of their business–you own part of that company and can benefit from its profits by selling your shares at any time (assuming they have value). You’ll also be able to vote on things like executive pay or whether or not they should take on new projects.

The first step toward buying stocks is deciding which ones are right for you: Do some research into companies whose products or services interest you, then compare their financial statements so that they make sense based on what kind of return on investment (ROI) they provide over time; this will help ensure that when considering whether or not purchasing these types would be worthwhile investments for yourself personally instead just buying something else entirely such as cashback credit cards where there aren’t any strings attached other than having money left over after spending all day trying to find ways get rich quick schemes online which never seem work out well enough until now thanks!

Investment goals and risk tolerance

If you’re looking to buy stock in a company, it’s important that you understand what your investment goals are and how much risk is involved.

Investment goals:

Understand your investment goals before buying stocks. Are you looking for long-term growth? Do you want to earn interest on the money in your account? Or do you plan on selling the stock as soon as possible after purchasing it (and possibly even losing money)? If so, then this might not be right for your needs.
Researching companies can be time-consuming–but if done properly, it can help ensure that any potential investments are worthwhile ones that align with your financial goals.

Company and stock research

The first step to buying stock in a company is doing your research. This means looking at the company itself, its financials and history, as well as its competitors’ products and performance. You should also consider factors like market conditions and economic trends that could affect your investment.

Company research: Find out what kind of business you want to invest in by reading about its mission statement or other materials online–or even contacting someone at the company directly if possible! If it’s not publicly traded (meaning there’s no way to buy stock), look into how many employees work there now versus five years ago; this can give you some insight into whether or not they’re growing quickly enough for their industry’s standards.*
Stock research: Once you’ve chosen which companies interest us most based on your personal preferences (and maybe those of your friends), we can start researching their stocks individually before deciding whether or not you want any part whatsoever.*

Brokerage accounts

A brokerage account is an investment account that you open with a broker. Brokerages are different than retirement accounts, which are set up by employers and administered by financial institutions like banks or mutual fund companies.

In general, you can open a brokerage account with either a financial institution or a discount broker (though there are some exceptions). Financial institutions tend to offer more support and resources for their customers but also charge higher fees; discount brokers cost less but require more work from investors on their behalf–and sometimes even from the brokerage itself!

Funding brokerage accounts

When you’re ready to fund your brokerage account, there are several ways that you can do it.

Bank transfer: You can transfer funds from a bank account directly into the account. This is generally the fastest way of funding an account and it’s free if you use online banking services like Chase or Bank of America.
Credit card: If you don’t have access to cashier’s checks or personal checks, another option is using a credit card as a form of payment for stock purchases. However, this can be expensive due to processing fees charged by both brokers and banks (around 2 percent). It also takes longer since there needs to be time for money transfers between institutions involved in processing credit card payments before being applied towards buying stocks on exchanges like Nasdaq or NYSE Arca Exchange, which operate 24 hours per day, seven days per week no holidays off so if something goes wrong during those hours then chances are good that someone somewhere will pick up their phone when caller ID shows up with “Unknown Caller” written across its screen rather than say “Happy Holidays!”

Types of trades

Depending on your circumstances, you may be able to take several different types of trades.

The most common is a traditional stock trade, where you buy shares in a company and hold them until they increase in value or decrease in value. This is also known as “long” investing because you’re holding onto your investments for the long term.

Another type of trade is betting on whether an asset’s price will go up or down over a certain period of time (the length depends on how much money you want to invest). These bets are called “options.” You can buy either call options or put options–a call option gives its owner the right but not obligation to purchase an underlying security at a specified price before expiration; meanwhile, put options give their own rights but not obligations on underlying securities at specified prices before expiration.[2]

There are two main types of mutual funds: index funds and actively managed funds.[3][4] Index-based investments seek returns that mirror those found within particular markets (such as stocks); actively managed ones try to beat market returns by picking individual stocks based on their perceived value relative to others’ valuations.[5][6][7]

Placing trades on a brokerage platform

Once you’ve decided which stocks you want to buy, it’s time to place your trades on an online trading platform. The first step in doing so is finding a brokerage firm that offers low fees and reliable service. Once you’ve narrowed down your list of potential brokers, it’s important to take some time to get acquainted with their platforms before making any final decisions about where to put your money.

When evaluating different brokerage firms and their software packages, look for the following:

A low price per trade (ranging from $5-$10)
Good customer support via phone or email during market hours (8 am-4 pm EST) and after hours via live chat feature or even 24/7 phone support if possible

Once you’ve decided which company suits all of these needs best, set up an account by providing them with personal information like name, address, Social Security number, etc., which they need in order not only to verify identity but also comply with anti-money laundering laws (AML). Once the registration process is complete, go ahead and create login credentials, then go back into the homepage dashboard section, where there will be various tabs, including the “Trading” tab where you should see an option called the “Trade Now” button. Click this button and follow the instructions given below.

Choosing a broker, funding your account, and learning about the process of trading stocks can help you make better decisions about which stocks to buy.

Choosing a broker is an important decision because it will affect how much money you pay in fees and commissions, as well as how accessible the brokerage firm is for questions or problems that may arise during trading. The best way to select a brokerage firm is by asking friends who have used them before for recommendations on who they think offers great customer service at competitive prices. If possible, try calling several different firms before making up your mind; this will help ensure that no one gets left out unintentionally because they were too busy answering calls from other potential customers!