2023-06-16 15:16:25
Buying shares is a way to diversify your savings and find more profitable investments. In addition, it may be wise for investors seeking diversification and a long investment horizon, ie five years minimum, so as not to be too exposed to stock market fluctuations. However, buying company shares is not without risk. Before venturing into it, it is advisable to master the functioning of the stock market and to understand its vagaries. Moreover, as in any investment, the alert rule requires that you invest only the sums that you are ready to lose.
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Who can buy company shares?
Anyone can buy shares of companies. Listed securities can be purchased on two markets:
– the primary market, on which a company is listed on the stock exchange and offers shares for the first time at an issue price set in agreement with the authorities responsible for regulating the market
– the secondary market, on which investors trade shares at a price that fluctuates according to supply and demand.
Investors have two ways to buy company shares: invest directly, via a BEA or a securities account, or go through collective management, via a manager who takes care of the creation and of portfolio management.
If the trader chooses to buy shares directly, the investor will manage his share portfolio by deciding alone which securities to buy or sell. This strategy takes time and involves keeping abreast of economic activity at large, of targeted businesses in particular. A share being nothing more than a share of the capital of a company, buying shares amounts to investing in a company and therefore to receiving dividends if the latter makes a profit. Why does finance guru Warren Buffett recommend investing only in what you know, in terms of envelope, the investor wishing to buy stocks directly must have an open account with a financial institution (bank, broker, etc.). Two main types of accounts are possible: the securities account or the PEA.
Like life insurance, the securities account includes account maintenance fees, which must be taken into account to choose the best offer offered by the establishments. Similarly, brokerage fees are charged to the investor for each stock market order placed with the intermediary, ie each request to buy or sell for a specific share. But collective management also generates costs since the investor must then pay entry fees and operating costs.
Buy company shares through a cheap broker
The rise of the Internet has allowed the emergence of low-cost online brokers. They offer to execute all trading orders placed online from a computer, tablet or smartphone. Most low-cost brokers charge meager commissions, usually under $20.
Some even offer to acquire shares at no additional cost under certain conditions. Indeed, other operations can prove to be profitable, the processing of dividends for example.
Low-cost online brokers allow individuals to manage their own portfolios while benefiting from advice and tools to help with securities research. However, it is necessary to open an account and make a deposit that the broker will invest in the securities chosen by his client. The minimum amount of this deposit varies between 500 and 1000 dollars.
The intermediary chosen must be licensed and authorized to practice. broker
Buy company shares through a full service broker
Full-service brokers offer identical services to their low-cost counterparts. However, with their commission, they encourage their customers to buy, as well as to sell shares, even if it is not necessarily in their interest.
Extreme vigilance is therefore highly recommended, despite the advantages offered by full-service brokers (market analysis, paid streaming tools to see the evolution of shares in real time, etc.) Newbie shareholders, in particular, are invited to pay more attention.
Conclusion
Buying your first stock should be the start of a lifetime of successful investing. If things go wrong, keep in mind that every investor goes through tough times. Long-term success means investing in mutual funds, focusing on the things you can control, make sure you have the right tools and choose the right brokerage account.
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