1. Go to YouTube and Google
Take time to view presentations by stock gurus. Listen to their checklists and guidance. Start with basics for beginners and gradually move to more sophisticated charts and moving averages,
2. Open an online brokerage account
Open a brokerage account. It’s similar to setting up a bank account. You complete an account application, provide proof of identification and choose how you want to fund the account. Personally, I recommend that you go to an office if they have one. This gives you a chance to interact with a live person to help you embark on a new adventure. You may fund your account by mailing a check or transferring funds electronically. Paying a few bucks more per trade at a brokerage that provides high-quality customer service is worth it, especially when you’re new to buying stocks.
3. Select the stocks you want to buy
Research companies you already know from your experiences as a consumer. After that, most of the information and analytical tools that you need to evaluate the business will be available on your broker’s website, such as SEC filings, conference call transcripts, quarterly earnings updates and recent news. Most online brokers also provide tutorials on how to use their tools and even basic seminars on how to pick stocks.
4. Decide how many shares to buy
Consider starting small by purchasing a few shares to get a feel for what it’s like to own individual stocks. You can add more later on as you learn the ropes.
5. Choose your stock order type
• Market Orders – Allow you to buy or sell the stock at the best available current market price. Your order will be executed immediately.
• Limit Orders – Give you more control over the price at which your trade is executed. If IBM is trading at $100 a share, you can put an order at $95 per-share price. Your order will be filled if price drops to $95. On the selling side, a limit order tells your broker to part with the shares once the bid rises to the level you set. Limit orders are a good tool for investors buying and selling smaller company stocks, which tend to experience wider spreads, depending on investor activity. They’re also good for investing during periods of short-term stock market volatility or when stock price is more important than order fulfillment.
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Victor Santos Sy graduated Cum Laude from UE with a BBA and from Indiana State University with an MBA. Vic worked with SyCip, Gorres, Velayo (SGV – Andersen Consulting) and Ernst & Young before establishing Sy Accountancy Corporation.
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He retired after 50 years of defending taxpayers audited by the IRS, EDD, BOE and other governmental agencies. He published a book on “How to Avoid or Survive IRS Audits.” Readers may email tax questions to [email protected]