How to buy stocks – Beginners Guide 2023
Mark Nielsen
Updated: 27 September 2023
Buying stocks is one of the smartest things one can do. Why? Investing has many benefits, you make personal financial gains and start generating passive income. In this article we take you through every possible question you might have about investing in stocks. We show how you can start buying stocks with 0 fees and commissions.
Investing is straightforward, but starting it is not. First thing you need to do is find yourself a good reputable brokerage account. There are hundreds of different trading platforms to choose from which everyone has their own benefits. We compared the best brokers in the world and will show you where you can start investing with very little money.
Buy stocks with eToro – commissions start from 0
We found out that the easiest way a beginner can start investing in stocks is with eToro. eToro is a global trading platform that allows investors to buy Stocks, CFDs, ETFs, Cryptocurrencies and much more. You can even use their unique CopyTrading tool to start copying professional investors portfolios.
- First you need to open an account with eToro – start here
- Make your first deposit – minimum deposit is 50 dollars. You can use any type of payment to move your funds to opened account (Neteller, Skrill, Paypal, Bank transfer etc.)
- Research what stocks you want to buy. You can do your own research on the internet or follow professional investors at eToro. Buy stocks of a companies you truly believe in, not because you want to them to go up.
- Once you found the right stocks for your portfolio, proceed to placing a buy action. Choose the amount of money you want to invest or number of stocks and press set order.
Now you know that investing is straightforward, it’s time to look the dos and don’ts of investing as well as basic information and lingo.
Know the different types of orders
Investing is stocks is easy, but there is so much more to learn to make it profitable. You need to know what different order types are and how they work. Also, many trading platforms allow you to buy CFDs as well as stocks so make sure you choose the right one for you.
CFDs are complex leveraged instruments that can either make or break your investments. It gives you an ability to purchase stocks with much higher buying power. It also works both bull and bear markets, so you can even make profit from downtrends.
Different order types:
- Ask: the price that sellers are willing to pay for the stock.
- Bid: the price that buyers are willing to pay for the stock.
- Spread: the difference between buy and sell price also referred as broker commission. These can differ a lot between trading platforms.
- Market order: a simple request to buy or sell stock as fast as possible with the current market price.
- Limit order: a limited order or request to buy or sell stock with specific price.
- Stop-loss: a limit price that closes your position either with success or loss. You need to use this if you plan to daytrade or do short time-span trading.
You don’t need to learn everything at one go but doing good research before investing is good way to ensure that you know what you are doing. Most investors are good with only the basic order types.
Commonly asked questions about buying stocks
We did research about the most asked questions about starting to invest in stocks. Here they come.
What are best stocks for beginners?
There are no single “best stock” picks for any trader. Therefore, following financial advising is not always a good thing. Every investor should do their own research about stocks based on news, reports, and other investors speculations. But for beginners the best stocks would be ones that can hold their current price well and pay some dividends.
When beginners are ready to take steps further, they can start learning about different trading instruments to leverage their gains.
Is now a good time to buy stocks?
Always is good time to buy stocks, it is about what to buy. Every stock and every industry have their pros and cons, you need to figure out how they work. For example, when one industry goes down, other industry might go up – therefore dividing portfolio between time, industry and stocks is very important.
If you are planning to make long-term investments, speculating their price in short time span is not good. Holding them is the only way to gain the benefit of historical background of stock growth which has been around 4 – 8 percent for investments.
One thing you should know that in investing everything is speculative and history is not a grant for the future.
How much money I need to buy stock?
Back in the days investing was only the deep pockets game. Now everyone can start buying stocks with pocket exchange. The lowest possible investment can be between 10 – 50 dollars at a time. But remember many stocks are worth more than that, so you probably need to buy only a fraction of a stock with any leveraged instrument or buy cheaper blue-chip stocks.
Are stocks and shares same thing?
Shares and stock mean the same things. So, owning or buying shares is the same as buying stocks. But in more in-depth trading the lingo can take you wrong, because sometimes shares can be referred as leveraged CFD instruments or traditional stocks.
Buying stocks and taxes – how do they work?
Typically, in investing you pay taxes only when you have sold your position. Every country has their own tax-policy which you should follow because they can differ a lot. You can reduce the amount of tax you pay if you have lost money in stock trading so next profitable trades have lower taxes.
Also, the percentual amount of taxes differs a lot by country. We recommend you learn taxation of your country before placing a trade. CFDs are exception, you usually cannot deduct the lost investment from taxes.
With ETFs or other funds, you usually pay taxes only when the fund is sold even though you have made profit during the years you have hold it. This is because the growth is automatically added to the fund not to your bank account.
How to start investing today?
Investing today is easy, but the informational flood is unbearable. Many investors end up not to invest just because they cannot find the right information they need. This is how Stockbonkers was born. To educate and give opinions about trading. We compared every trusted and regulated broker in the world just for you.
- First you need to find a trusted and a reputable broker. We can recommend eToro because of their low fees and commissions. This way you ensure you make to most of any trade position placed.
- Create free trading account, it only takes couple of minutes the get started with minimum deposit.
- When the account is opened and verified you can start buying stocks. But before buying do your own research when and what stocks to buy. Some industries tend to perform better than others.
If you are not sure about what stocks to buy, you can consider investing in indexes or funds which manage themselves. They divide your investment among many stocks according to their plan.
When to sell stocks – the dos and don’ts
When purchasing stocks there are many different strategies but one of them is most popular and it is holding the stock for at least five years. This is because markets can be volatile in shorter time span, so you minimize the risk of market volatility.
You should only consider selling your stock if you think it’s a good move. Usually this is when the stock has risen enough value that it is highly profitable. Sometimes you don’t need to sell it ever if it pays you great yearly dividends.
Many beginner investors make bad decisions when market take a short-term fall to prevent further losses, this is considered a bad strategy when investing in stocks for longer term.
Mark Nielsen
Mark Nielsen is a long-time investing enthusiast and writes his own opinions and guides for StockBonkers. To find out what is in Marks mind, keep reading articles published by him on this website. He started investing in early 1990s when the stock market was really volatile compared to these days. He says everyone should learn about investing, it might give you more freedom in your life.