How to Buy Stock Online – A Conservative Approach

Just because buying stocks is easier now than it ever has been does not mean you should approach these important investment decisions haphazardly. If anything, more caution should be used now when buying stock online, as many times there will be no limit to the amount of trading you can do at an astonishing rate, and when not kept in check, you emotions can get the best of you and cause you to over-trade. That is NOT how to buy stocks online.

Instead, make sure you have a set game plan ahead of time. It is best to have strict plan that you adhere to when deciding what stocks to buy, so as if not to make any careless mistakes in the heat of the moment. My personal opinion is to focus on buying stocks online from reputable companies that pay a good dividend, that way I can feel comfortable knowing that I can reinvest those dividends over time and add that to my portfolio. I wouldn’t be so presumptuous as to say that this is the only answer to the question of how to buy stocks online, but it is definitely my answer.

Lastly, if you unsure of your abilities, or not completely sure on how to buy stocks online in a good and long term way, you might do well to continue to do some research first. There are ample amounts of stock trading books online, as well as other online resources that you can check out to help you with any of your stock buying questions you might have.

How to Buy Stocks Online

The act of buying stocks online is a pretty simple process really. It’s the strategy and systems that you use that are a whole different ball game. You will first need to set yourself up with an online trading account at the online broker of your choice. If you do a simple Google search for “place the name of some online broker here + reviews”, you are bound to find some comments of what other like-mind stock traders think of their current and past brokers.

After your account has been approved you will simply need to fund your account using any number of methods that your broker will allow, and then finally you are set up and ready to trade. Whether you are looking to buy penny stock online or buy and hold for the long term, the process will be the same. And of course, as the mantra goes, never trade money you can’t afford to lose, because that is always a viable possibility. Getting set up to be buying stock online doesn’t need to be a difficult thing to do, your broker’s instructions should suffice, and they all have customer support you can call on in case of any questions.

Learn the Stock Trading Ropes

Opening an online trading account is not the end, but merely the beginning of course. After that you actually have to start buying stock online, if you want to make any money. If you are just starting out you might want to take a look at some sites like the Fool, or the Wall St. Journal. There are countless stock buying books and systems available for the average Joe, looking to start trading for the first time, all the on up to the seasoned pro.

There is nothing worse than starting out brand new at something, and feeling lost with no idea where to go. Make sure you educate yourself on not only the basics of buying stock, but specifically of buying stock online, as that is what you will be doing. Your online broker should have ample amounts of information on how to use their specific trading platform to buy and sell stocks online with.

Styles of Buying Stock Online

Not too different from before the days of easy access and cheap online trade, there are different ways to go about it, and different reason why people begin to buy and sell stock online. Some are in it for the hunt, the quick kill. These are those who buy penny stock online, or look for every new IPO that shows any signs of promise. They spend time in stock trading forums seeing if they can get an edge, or any insight into what the market might be doing today. These are the ‘day traders’ or the ‘scalpers’, maybe even the ‘swing traders’. Whatever name you call them, based on their style of trade, these guys are looking to make big money now, or at the very least they are looking to make a living from their day trading efforts. This is notable different than their counterparts; those who look to put away for retirement and have a nice nest egg based on a decent stock market performance over a number of years.

On the other hand, there exists a more conservative group. These people are look at buying stocks online as a way to supplement their retirement, and will do so over periods of 5, 10, 20, 40 years or more. A ten percent year is a good one to these folks, as long as it will keep up year after year. They are not in it for the thrill, nor do they often even consider the idea of quitting their day job earlier than anticipated based on a stellar performance of the stock market. Buying stocks online is simply a means to an end, and that end is a healthy and joyful retirement, at whatever age they feel comfortable doing so.

Buy Stock Online for your own Reason

I won’t profess to try and tell you how to buy stock online. You style is yours alone, and probably entirely based on your goals. So many things will come into play. Your risk aversity, your age, your financial goals, your nagging wife (let’s be honest), and a number of other factors that will determine how you go about investing your hard-earned money into the stock market. That question of how to buy stocks online is a difficult one to answer in that sense. The set up for both types of investors will be the same in regards to opening an account through an online broker, funding your account with the money you intend to use, and then beginning to buy stock online. After that however, your choices are limitless on how you will go about doing this. You might decide a subscription to the Fool is something you need, or other websites that will guide you in the right direction.

One of the questions that might be going through your head is why you would want to buy stocks online in the first place. Simplicity is probably the best answer to that. As opposed to old school idea of having to call up your broker, figure out the price of a stock, somehow also figure out where it has been historically, this can all be done now from your own computer with ease. Buying stocks online is the easiest way to begin to shape your stock portfolio into what you want it to be.

If you aren’t sure exactly how to buy stocks online, I by that I mean what stocks to buy; whether you should buy and hold or buy penny stocks, or what, allow me to make a suggestion. On a day to day basis the stock market can be brutal; it can be your worst enemy. Despite that, over time the stock market has historically gone up and up, and I believe it will continue to do that over the long haul. Approach your stock buying as what it should be: a long term approach to acquiring wealth.

The answer to ‘how to buy stock online’ has always been that. Slow but steady does win the race in this game, as it is something that needs to be approached with caution. Do your due diligence when buying stock online and looking for good stocks to buy. Those stocks that are going to add to your income are out there, but they must be searched for like diamonds in the rough. The best stock to buy might not always be the latest one that the latest guru is trying to promote. Research and learn about the company behind the stock. Do you feel that it is a good company, whose stock price is simply undervalued at the moment? Those are the kind of companies you want to invest in and be a part of.

Buying stocks online is done by opening a trading account through an online broker, such as eTrade or Scott Trade, just to name a couple of the big ones. You are set up with what is called a ‘trading platform’, and from the comfort of your own home you can open up charts, view historical data and buy stocks online.

The pluses of being able to buy stock online like this are many, as you can probably see already. The simplicity of trading from your own home, mixed with the beauties of competition have allowed stock traders and buyers alike the unique advantage of being able to make a stock purchase for a few bucks; usually between $3 and $7, from the numerous online brokers I have taken a look at and used. Indeed stock buying has never been more simple or affordable.

So how do you get started buying stock online? You’ll want to start by doing a little bit of due diligence on the different online brokers available to you. Doing a simple internet search for online broker reviews will probably bring you to a couple of forums where you can see what other people have said about their online trading brokers. After you choose one, you will need to register and sign up with that broker. They will have a pretty standard online sign-up form for you to fill out, then you will fund your account using a few different options available, and finally you are ready to buy stocks online.

Although mostly positive, there can be down falls to the simplicity of being able to buy stocks online. Being that it is much more simple and cheap to buy stocks, the allure of over-trading, under the guise of ‘day trading’, is always a threat. People, in their search for the best stocks to buy, will often find themselves scalping, or buying and selling very quickly, or falling for every little IPO or thinking they want to buy penny stocks for a quick buck. Don’t fall into these traps. Instead, focus on why you are buying stock in the first place and slowly grow your portfolio over time. That is how to buy stocks online.

Long term is a good phrase to end on when talking about the best stocks to buy, because that is what I focus on. Let me start by saying that what I do in no way resembles the idea of ‘day trading’ or the way some people will buy penny stocks in order to take quick advantage of small fluctuations in price. I am in this for the long-haul and want to buy stocks that are going to appreciate over time. In my opinion, these stocks are those that come from well established companies that for whatever reason, at the time of purchase are under-valued; trading for much less than I think the company is worth. Remember that a stock’s price will rise and fall in value NOT based on a company’s value or performance, but whether people are currently mostly buying or selling that stock. When people are very bearish on a stock that to me seems like a good company that is only going up and up, I feel I have a winner.

The answer to how to buy stocks lies not in ‘how’ so much as ‘when’. When I find a company like the ones mentioned above, I like to buy on dips. Those are the exact moments when I feel like the company is under-valued, and will continue to go up in price over time. The only other criterion I will really focus on is dividends. I like to see a company that will pay me a good dividend; one that I will reinvest of course, for further compounding effect. For me, that is all there is to stock buying. The question of what stocks to buy should really be what kind of stocks to buy, and that is my answer. I like to buy stocks online in this fashion for the simple reason that I can know that I am adding to my ever-increasing portfolio, from the comfort of my own home, and at a relatively good price, seeing as buying stocks online costs no more than a few dollars per trade.

Yes, that’s right, the internet. If you want to know how to buy stock, or know how but want to know what the best stocks to buy are, the internet can be your best friend. One of my favorite sites is the Motley Fool, which gives great advice on not only which stocks to buy, but also what sort of things to avoid when buying stocks online. You’ll even find the occasional interview with big guns such as Warren Buffett.

I won’t be putting any kind of a top 10 stocks to buy list right here, as a list like that would of course be both personal opinion, and ever-changing. What I will mention however, are a few of the things that go through my head when I am looking for good stocks to buy.

When I go to buy stock online, one of the first things that I will look for is a stock that is under-valued. Obviously I can’t stake claim to this idea, a lot of people look to do just that. The point to remember however, is that stock prices are not directly affected by how well a company is performing, or how good their outlook is. Stock prices are dictated by supply and demand, are there more people wanting to buy this stock, or sell it off? It just so happens that on occasion you can find more bears (people looking to sell), for whatever reason despite the fact that the company is a great one, with a bright future ahead. No one can predict the future of course, but that is one of the first things I will look at when considering what stock to buy.

My next move is that I will take this sort of ‘top stocks to buy’ list that I have created, from much research using the above tactic, and look for something very specific. I want to see a good dividend. That’s right, I want to see a company that pays good dividends, with the sole purpose of course of reinvesting those dividends right back into my portfolio. Many a millionaire has claimed that this at least in part is a reason to their success. Don’t ever underestimate the power of compounding your returns by reinvesting your dividends.

Lastly, I want to find those reputable companies that have stood the test of time. Although it works for some, I’m not looking to buy penny stocks, or for some guru’s latest ‘hot stocks to buy’ list. I want to buy stocks from the large companies that have been around, pay a good dividend, and will be around forever. Not every purchase of stock will be a long-term winner, let’s be honest. But this strategy is the one that I follow, and will continue to do so for as long as I plop down next to my computer with the question of what stocks to buy today.

Yes, I said it, but I suppose now I have to explain, and let me preface this by saying that I AM NOT with 5-10 years of normal retirement age. If I were I might be singing a different tune. Here’s the deal. Based on history, reinvestment of dividends and the fact that I like to buy stocks at a lower price, rather than when they are close to peaks, I prefer a bearish market. I want the best bang for my buck right now. Unless you are within 5-10 years or so of retirement, you should want the same thing.

It isn’t too different than other markets. Would you want to buy a house when house prices are up towards their peak, just because as of late house prices are screaming up? I hope not, because after the boom comes the bust. This is also how to buy stocks. Buying stocks and buying real estate are similar, and it sounds rudimentary I know, in that you want to buy low, and sell high. I know you have heard that mantra, but you’ve got to apply it too!

So what are the best stocks to buy? Well that is a debate for another time, but what I do know is that on any given stock, I’d rather buy it cheaper than more expensive. I know… duh.  Stock buying doesn’t need to be rocket science, or any kind of science for that matter. Just know that you are in it for the long-haul, that this is to secure your future one day down the road, and not next week, and you’ll feel a great sense of relief as you suddenly realize that your portfolio losing 38% in one year, is not the end of the world… and not even the end of your journey to buy stocks for your future.

So what do you do now? Well for one thing, you don’t panic. Know that when the market is going against you, it is often a blessing in disguise. Set up shop with your preferred online broker to be able to easily buy stocks online, and begin to do so as your funds warrant. I won’t be spouting off some sort of ‘best stock to buy’ list, but I can tell you some of my favorite things to look for: I like to buy stocks that seem to be under-valued, and that pay a good dividend. I am also partial to well-known companies, the Coca-Cola’s of the world. In the end of course, buy stocks how you feel comfortable, and how you see fit.