The stock market is an ecosystem that provides ample financial opportunity for everyone. However, before making a purchase, you should prepare for it. Gathering the necessary information and knowledge will help you decide what, when and where is best to buy stocks.

If you’re one of hundreds of investors seeking knowledge on how to buy stocks, then this is the article for you!

What Are Stocks?

Stock is a share in the ownership of a particular company or business, which refers to a claim on the company’s assets and profits. Therefore, by owning a share, individuals are considered to be partial owners of the company of which shares they buy. 

Stocks are also known as equities. Stock trading is being conducted on exchanges through an electronic process. Some companies sell their stocks directly to investors, while others do so through a brokerage platform.

One of the main reasons why companies list their stocks for sale is to raise additional capital to keep their business running. Major stock exchanges where you can buy stocks are, for example, Nasdaq, NYSE, Euronext, Shanghai Stock Exchange, and others. 

Before buying particular stocks and hoping to turn them into a profitable investment opportunity, you should first focus on several key points. 

Research Your Options

There is no easy way to become a profitable investor. This is a line of work that requires a lot of research, awareness, and hard work.

For starters, here are a few key topics you should gain insight into:

• Learn about main investment principles, such as risk tolerance, diversification, and investment goals. Depending on whether you’re seeking to become a day trader or secure extra funds for your pension, for instance, will greatly influence your decisions.
• Research which stocks to buy and evaluate their potential for upward price movement. This may be determined by the popularity of different companies, like AI developers or oil refineries. Certain world events, like droughts, technological breakthroughs, or conflicts breaking out, can significantly influence the price of some stocks, and reading news about these events will help you make educated decisions.
• Your investment will depend on your broker since they are your market gateway. You should make sure that the broker you’re dealing with is properly regulated, has a long track record, and a reliable service. Of course, it must also be able to purvey the exact product you’re looking for and offer its service for a decent price. This is easier said than done, so take a look at our reviews for more info.

Choose the Type of Stock

Once you start researching different types of stocks and gathering more intel on what they represent, more than a dozen subcategories will surface. Various types of stocks are based on different criteria, like company size, industry, and location. Hence, you will face terms like common stocks, preferred stocks, growth stocks, microcap stocks, income stocks, IPO stocks, penny stocks, and others.

What is important to pay attention to is the crucial difference between two major types: 

Common stocks are most frequently traded and probably the best stocks to buy if you’re a retail trader. Owning them gives you a profit share of the company and allows you to vote. On the other side, preferred stock buyers are a somewhat opposite group of shareholders.  They do not have any rights to participate in company decision-making, but they do have the advantage of receiving profits before common shareholders. 

Also, if preferred stocks were compared to the common ones, they’re less volatile, which, on the other hand, makes common stocks more promising for profit in the long run.

Where to Buy Stocks?

According to Vanguard, stock portfolios are leading in annual returns and display a constant advantage over bonds in the period between 1926 and 2021. That is one certain proof of stock market investment potential, whether in the long run or as a part of any other strategy. 

This article further explains some of the most reliable and most practiced methods of buying these assets, so make sure you test and learn about each before making a final decision.

Stock exchange – full-service broker

Full-service brokers are not suitable for everyone. However, it’s no secret that rich individuals prefer this service when looking for lucrative investment options to enlarge their existing wealth. 

These brokers are professionals who are known for putting extravagant price tags on their services. In return, however, their clients get a full service, from detailed retirement plans, real-estate investment strategies and stock buying plans.

Online brokerage account

Most retail traders prefer opening an account with an online broker in order to buy stocks online. Each brokerage powerhouse offers plenty of account types. 

To boost your buying potential, you’ll probably need a margin account that allows you to lend money from the company. While it’s hard to decide which is currently the best trading platform, you should probably sign up for a broker that offers MT5, cTrader, or similar.

Direct stock purchase plan

Buying stocks directly can be done if you decide to go through with it, but you should remember there are additional fees charged. Also, these direct purchases are not really conducted through the company itself, rather through a third party. For example, in the US you can purchase a stock plan through AST and Computershare.

Considering that you’ll be charged a percentage per each purchase, this currently not-so-favorable way of buying stocks has been overshadowed by the attractive terms offered by big brokerage firms.

Watch Out for Various Scams on the Stock Market

The stock market is by no means a recent invention, and for as long as it existed, various swindlers and charlatans have tried to profit from it underhandedly.

Some of these include pump and dump, scalping, and stock-shorting scams. These regularly overlap with other schemes like boiler room scams, pig butchering, or Nigerian prince scams, making the stock market that much more dangerous for newcomers.

Make sure to thoroughly research the background of any company before you invest in stocks. Additionally, make sure to keep an eye on our website from time to time, as we regularly debunk fraudulent schemes.

What to Do If I Fell Victim to a Fake Stock Broker?

The internet has made it possible for various con artists to push their fraudulent strategies onto unsuspecting investors. Some schemes have become so sophisticated they are nearly indistinguishable from the real thing. 

We have developed tactics that let us fight back against these miscreants! Should you require help recovering the money these cybercriminals stole, we are at your disposal. You may book a free first consultation with our expert team in order to start a recovery procedure.