According to Warren Buffett, CEO of Berkshire Hathaway, smart investing means: “Never invest in a business you cannot understand.”
The public offering of Lyft on Friday presents the perfect opportunity for people across the country to invest in what they understand! Whether it’s an application company or an appliance business, there are three simple steps anyone can follow to begin investing today.
1. Do Your Research
Research is the longest and, arguably, the most important step to investing. With most stocks, you can easily find a chart showing how it has performed over its history. But with a newer company like Lyft, the main thing you have to go on is the Form S-1. This is filed with the SEC whenever a company goes public and details past finances, a balance sheet, and its growth strategy. What you’re looking for with the S-1 and other metrics is potential for growth. If you review every scrap of information you can get your hands on and still think the stock is a good investment, it’s time to open a brokerage account.
2. Finding the Right Brokerage Account
Shopping for a broker is a lot like shopping for a toothbrush. They all look the same, and at first glance, the only difference is the logo. But this couldn’t be further from the truth. Who you trade with could save or lose you a lot of money in the long run. Some, like TD Ameritrade or Ally Invest, have higher fees but offer better tools to help you make the right choices. Others, like Robinhood, have few or no commission fees but don’t have much in the way of investment help. In the end, you’ll have to decide which brokerage is the best for you and put at least enough money in it to make your first trade.
3. Pulling the Trigger
You’ve done research. You have an account. It’s finally time to buy your stock of choice. Go ahead and log in to your broker’s website. While many will have platforms for experienced investors, just searching for your stock on the main website or app will be enough for your first trade. Make sure the price is still right and press buy.
Congratulations! You now own part of one of your favorite companies. More importantly, you have joined millions of others in the community of investing. Now get out there and find your second stock!
How to Buy Stocks Online Free? Finding the Right Brokerage Site for You
It’s time. You’ve finally decided to start investing and buy your first stock. Unfortunately, you can’t just throw a few shares into your Amazon shopping cart, but you can set up an account quickly and easily with any number of online brokerages. What do you look for in a broker? We’ve boiled it down to the top three things anyone should look for in a brokerage website.
1. Commission and Fees, or the lack thereof
We’ve all heard of companies charging “hidden fees” and getting one over on their customers, but the reality is that most fees aren’t hidden at all. The most common ones to look for are there any commission on trades, transfer fees, closing fees if you decide to close your account, and annual fees for basic maintenance. Most brokerage sites will have at least one, if not all, of these fees as part of its cost. There are a few that don’t have any at all, and that may be the deciding factor between two brokerages. Warning: If you find a brokerage that isn’t willing to offer information about this upfront, find a different broker. You want an honest relationship with the business in charge of keeping your money safe.
2. Account Minimums
Almost every major online brokerage offers accounts without a minimum, but a few do. While you certainly need enough money to start making trades, many people don’t have the prerequisite $500 to throw into a new account. For many, this means saving up to have enough to cover these minimums, or opening an account that does not have any. Keep in mind that although you might start with enough, you also don’t want to drop below the minimum and encounter one of the fees we discussed above.
3. Your Trading Style
The third and final thing for you to consider when shopping for a brokerage is you! If you’re new to investing or don’t have a lot of time to spend researching stock picks, you might prefer an account with more of a helping hand, but if you plan on day trading to make investing a career, lower commissions might be worthless support from your brokerage. Consider your needs and goals, shop around, and choose the right brokerage site for you!
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