Find a brokerage
Obviously, the first thing you need to purchase stocks from the stock market is a way to place an order. To do this, you would need a brokerage, who acts as a mediator between you, the buyer, and the seller, helping you to manage your transactions.
Investors don't need to worry about commissions and spreads as much as traders do, but that doesn't mean that they neglect it entirely. Having lower commissions and spreads is always a plus in stock market investing.
Since you will be making a deposit with the brokerage it is important that you use a reputable and reliable brokerage.
Here are a few well-known, well-managed and highly secure brokerages for investing.
- Interactive Brokers(Over 200 countries)
- Robinhood(USA only)
- TD Ameritrade(USA, China, Hong Kong, Malaysia and Singapore only)
The commissions for each brokerage varies but for the most part, I would highly recommend Interactive Brokers which I use myself(I'm from Singapore). Robinhood may be the better choice for US Citizens, as they have free commissions and a pretty awesome referral system which gives you a free stock for each person you refer(sadly I can't apply since I'm a Non-US citizen). After you've chosen and signed up for a platform, you'll have to do a lot of verification to show that you are at least 18(if you're not, ask your parents for help). Then you would have to wait several days for them to actually verify you and allow you to deposit some money.
Make a list
While waiting for the approval of the brokerage you chose, you can read and listen to financial news from platforms like Bloomberg, Seeking Alpha or The Motley fool and craft a list of a few stocks you would like to buy. If you don't have enough money to buy all of them, or just don't want to risk too much money, you could always look into ETFs which contain the stock which you are eyeing.
You could do this by simply going on Google and looking up 'ETFs with Tesla(TSLA)' for example and take note of the ticker so you can buy it once your account gets approved. It would be a good idea to list down a few of these which are within your budget, making sure that they aren't all from the same industry so that there is diversification in your portfolio. Make sure to apply the approaches to investing as well, to ensure that you aren't just blindly gambling your money away.
Place an order
When your account is finally approved(it may take a few days), you can make a deposit(which could also take a few more days - It sucks. I know), and place that order for the stocks/ETFs you decided on in the previous step. Remember, you should try to use a limit order when placing an orders for these stocks as much as possible. Also, using the price algo management function in interactive brokers(the other platforms may have this too, I'm not too sure), is good practice as it ensures that you get your order filled at a price as close to your limit price as possible.
If I missed out anything or got anything wrong, please feel free to reach out to me at 'jingrui.wu.2002@gmail.com'.
If you liked this article, feel free to check out my other ones and continue to follow me on my journey to become a millionaire.
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