Buying Stock

By Liz Jones

  • Overview

    One way to invest money is by buying shares of stock in a public company. Stock prices fluctuate daily so weigh the decision to invest in stocks carefully. Research the stock to see how it has performed historically before purchasing. Brokerage firms buy, sell, and trade stock in lieu of the public directly buying stock. Stocks are not insured and the investment can fluctuate.
    • Step 1

      Research the stock market by looking at the financial section of the newspaper. You can also watch financial reports on television or research stocks on the Internet.
    • Step 2

      Decide on the stock to purchase based on price and your investment goals.

    • Step 3

      Hire a brokerage firm to make the stock transactions for you. Research these firms by checking out their websites or asking friends and family who may do business with them.
    • Step 4

      Use a full service brokerage firm if you want an advisor. These firms cost more but they make recommendations on the best stocks to purchase based on your goals.
    • Step 5

      Retain a discount brokerage firm if you know what stocks you wish to purchase and do not need investment advice.
    • Step 6

      Fill out the paperwork the brokerage firm provides to you. You will also need to put money into the account you are opening with this firm. Your broker will tell you the minimum amount of money you need to open the account but bear in mind you must have enough money to cover the transaction.
    • Step 7

      Request that your broker buy the number of shares of the stock you want to purchase.
    • Skill: Moderately Easy
    • Ingredients:
    • Broker
    • Stock prospectus
    • Tip: Stocks can potentially produce a windfall but they also can lose value. Since they are not insured, it is a common practice to take out a stop loss option. If the stock loses, value and goes below the stop loss price it is automatically sold which prevents further losses from occurring. Ask your broker if he offers this option.
    • Warning:
    • Stocks are not insured. They can lose all value so be sure the money you invest in this venture is money you can afford to lose. If you need a guaranteed investment, stock may not be the route to take.

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