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.

There of course are different ways to go about stock buying, depending on a number of factors. Not the least of which might be your age. The mantra I have always heard and lived by is to invest in more ‘risky’ investments using your age as the percentage that represents the more ‘conservative’ part of your portfolio. So if you are 40 years old, this idea would state that you should have 40% of your portfolio in more conservative investments, and 60% in riskier investments. I’ll leave determining what is conservative and what is risky up to you and your financial planner, but suffice it to say, it might be a good thing to think about when determining what stocks to buy, and how to buy stock in general.

Buying stocks can be done many ways, but quickly increasing in popularity is the idea that you can buy stocks online. This is done through an online broker where you set up a trading account, fund it with your desired amount of money, and can instantly begin buying and selling stocks at will. I wouldn’t use the ease with which you can buy stock trick you into buying every new IPO or to make you buy penny stocks on a whim. Even though it is cheap to buy stock online remember that your money is at risk with every trade that you place, so it must be done prudently. Buying stocks for the long term, from good reputable company is a far better option than looking to buy stocks off of some ‘good stocks to buy’ list of the day.

Stock buying in my opinion is still one of the last ways that the little guy can get ahead. Through prudent market research, watching companies and stock prices as they rise and fall, you can essentially buy-in and own a portion of some of the greatest companies this world has to offer. That is not something that should be taken lightly, but definitely something that every person who has considered the idea of buying stocks should do.

I firmly believe, that in addition to your Roth IRA’s and your 401k’s and everything else that a person might be banking on for their retirement, the simple idea of stock buying, that is individual stocks, in well established and profitable companies is the way to buy stocks for the long term. These are the companies whose stock prices always go up and down, but remain positive over the long haul, with seemingly no possibility of ever going out of business. These companies are those that pay a good dividend, which can be reinvested into purchasing more stock shares to further compound the size of your portfolio over time. In that way, the question is not so much how to buy stocks, but when.

Stock prices go up and stock prices go down. That is the nature of the beast, and always will be. If you stick to the idea purchasing stock in the above mentioned type of companies, instead of squandering your money trying to buy penny stocks or worrying about what are the hot stocks to buy at the moment, you are setting yourself up for the best way of how to buy stock for the long term. Keep this mentality, and don’t let the stock burn a hole in your pocket, so to speak, when it begins to gain value. Remember what you are doing and how you still want to be a part of the market in five, ten, thirty or however many years it is until you hope to retire.

For some people the question might be more of how to buy stock on a low budget. I don’t however think the answer is much different. Some people believe that buying a stock who’s share price is only $10, is five times the value of a stock who’s share price is $50. That is not necessarily the case. The first stock could drop to $2 per share just as easy as the second stock might rise to $100, split, then do it all over again. With a hypothetical $500 I would much rather be able to only buy 10 shares of an excellent $50 per share stock than 50 shares of a mediocre $10 per share stock. Don’t let bigger stocks scare you away, they are often better companies and the exact answer as to how to buy stock on any budget, for any person.

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.

Still, there are few better ways to prepare for retirement and make good money, than buying stocks. To be honest, I think the problem boils down to how people go about buying stock, more so than the simple fact that they buy stock at all. I’ve made mention before that the stock market falling is not bad for everyone. Again, if I’m not just about to retire within the next few years, I don’t want to try and buy stocks when they are at their peak. Knowing that over the time the market his always risen, I would much rather be involved in stock buying when the market is low, getting more bang for my buck and then holding on for the long term.

That being said, I won’t profess to tell you what stocks to buy or even really how to buy stocks at all. I’m no professional. I suppose I can tell you however, how I play a situation like this and what I intend to be doing for the foreseeable future.

It is my personal opinion that when buying stocks the best stocks to buy are those that pay a good, solid dividend (with the idea of reinvesting these dividends), and that these dividend-paying stocks be of reputable companies that have stood the test of time. I’m interested in how some people try to buy penny stocks at six cents per share, hoping it goes screaming up to nine, that’s just not my style. That quick ‘buy stock online’ idea to sell it a few minutes later can be dangerous, and isn’t the sound, long-term investment approach that I’m going for.

Instead, I am looking to add shares of stock of the above-mentioned type of companies, and to continue to buy on dips, such as the severe one most companies saw around the end of 2008. These shares will average out and continue to add up, all the while paying out their fantastic quarterly dividends that will be invested back in for further compounding awesomeness. I truly believe that over the long-haul, that is how to buy stock. There is no need to work your tail off at the stock market, let the market work for you over time when buying stocks.

So, how to buy stocks online? The first thing you will need to do is open a stock trading account with the online broker of your choice. There are quite a few reputable companies out there, but suggestion is to do a simple Google search, and find reviews on the many different online brokers available to you, and see what the people in the trenches are saying about their brokers right now. Buying stocks should be a good experience, but with the wrong broker it can be far from it.

When you have set up with your online broker of choice, you will need to fund your account with money. Different brokers will allow you to fund in different ways, and also have different minimums that you will have to fund your account with. Those would be just a few of things that you would want to look at before opening an account with an online broker. When you do, you will be set up with what is called a trading platform. That is how to buy stock online. Stock buying using a trading platform is simple, and really just a matter of point and click. There might be a bit more to it, but the best way to figure it out is to play around with the platform. I wouldn’t do this using your hard-earned money, however. Most places will allow you to open a dummy account, in other words, an account with $50,000 in fake money so that you can practice buying stocks online without any risk to your capital.

How to buy stocks doesn’t need to be a difficult question to answer, the real question lies in what are the best stocks to buy, once you set up online. Good stocks to buy abound, but you will need to be looking in the right places. I would typically avoid the hot trends of looking for penny stocks to buy, and other more risky moves, and sticking with reputable, long-term companies that pay dividends when you are looking for the best stock to buy for your personal portfolio, and especially so if you are just starting out. There are countless places online that give good, sound advice on what stocks to buy, based on years of cumulative experience between many different professionals. Keep things simple and realize that you are in the game for the long-term, and your chances of coming out fine greatly increase.

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.