How to Buy Stocks for Beginners

Roberto Rivero
15 Min read

To many, investing in stocks may seem like an activity which is reserved for only for a select few. However, these days, investing in the stock market is easily accessible for most people with an internet connection.  

In this article, we will provide a step by step guide of how to buy stocks for beginners, including what you should consider before buying shares, choosing a stockbroker the pros and cons of stocks and much more! 

What to Consider Before Investing in the Stock Market 

Before you concern yourself with how to buy stocks, there are several important things to consider before you start investing. So, what do you need to consider before you start investing in the stock market?

Create an Emergency Fund. Any money invested in stocks is at risk of being lost. Therefore, it is important to have cash set aside in case of emergencies.
Evaluate Your Finances. How much can you afford to invest? Consider investing a fixed amount on a regular basis to avoid buying at the top of the market. Don’t invest any more than you can afford.
Pay Off Those Credit Cards. If you have unsettled credit card balances or any other high-interest debt outstanding, pay this off before you start buying shares. Simply put, it is very unlikely you will find an investment which will outperform the annual interest rate of a credit card, meaning you will end up losing money.
Create an Investment Plan. Whilst it may seem tempting to jump straight in and start buying shares, this rarely produces good results. Take time to highlight your investing goals and plan how you intend to approach the market.

There is also an additional, and very important, factor to consider before you can start buying shares, which we will look at in the next section.

Choosing a Stockbroker 

In order to start investing in stocks, you need to choose a stockbroker and open an investment account. A broker acts as an intermediatory between investors and the stock market, facilitating the buying, selling and holding of shares. 

When it comes to choosing a stockbroker, there is an enormous amount of options to choose from and it is important that you take your time and pick the right one for you. Here is a list of things to consider - but, bear in mind, it is by no means exhaustive. 

How to Choose a Stockbroker
✔️ Ensure any broker you consider is fully licensed, authorised and regulated with a respectable financial authority, such as the Financial Conduct Authority (FCA) in the UK or the Securities and Exchange Commission (SEC) in the US.
✔️ Make sure your broker fits your investment profile and offers services which suit you. Some brokers provide lots of advice and guidance for investing in stocks, which can be particularly helpful for beginner investors. However, for more knowledgeable investors, this may not be important. Likewise, many brokers now offer the opportunity to invest with fractional shares, which can be an incredibly useful product if investing with smaller amounts of capital.
✔️ Check what stocks and other assets you can invest in through the broker. By this point, you may have a good idea of what you want to invest in, so make sure that any broker you consider offers it.
✔️ Consider fees, commissions, minimum deposits and minimum investments. The majority of brokers will charge some kind of fee or commission for transactions, which can add up, particularly if you plan on buying and selling shares on a regular basis. You should also look out for any annual account maintenance fees, which are sometimes charged for simply having an open account.

Investing with Admirals 

With an Invest.MT5 account from Admirals, you can buy shares in more than 4,300 listed companies from around the world. Benefits of investing with Admirals include: 

  • Open an account with a minimum deposit of just €1
  • Trading fees start at just $0.02 per share with a minimum transaction fee of $1 for US shares
  • No account maintenance fees
  • The ability to buy fractional shares on 700 of the world’s most exciting companies
  • Exclusive access to our Premium Analytics portal, where you can find the latest market news, sentiment and technical insight

In order to start enjoying all these benefits, and more, click the banner below to open an account today: 

Invest in the world’s top instruments

Thousands of stocks and ETFs at your fingertips

How to Find Stocks to Invest in 

Stockbroker chosen and investment account opened, you will now be wondering how to find stocks to invest in.  

Unfortunately, there is no “one-size fits all” answer to how to find stocks to invest in, as it depends largely on your investment profile. When considering investing in stocks, your stock picks will be influenced by:

Risk Profile. Are you risk averse? Or willing to take additional risk for the prospect of higher potential returns?
Time Horizon. Are you planning to buy and sell shares regularly? Or do you intend to buy shares and hold them for the foreseeable future?
Income or Capital Growth. Do you want your stock investments to generate regular income? If so, then investing in dividend stocks might be more appealing. However, if you are more interested in growing your capital over time, investing in growth stocks may be a better choice.
Your Knowledge and Interests. What are you knowledgeable about and what are your interests? You should only buy shares in companies whose business you understand, otherwise how can you be expected to judge whether it is a good investment? Investing in stocks from industries which you are actually interested in also tends to be beneficial.

Once you have answers to these questions, it will narrow the field and help you find stocks to invest in. When you have some prospects in mind, make sure you research the companies and their fundamentals thoroughly before buying any shares. 

Another investment tip to consider when looking for stocks to invest in is to avoid buying shares in a company simply because everyone else is doing it. Always be sure to do your own research to evaluate whether an investment is right for you and your investment goals, rather than just following the crowd. 

To find out more about how to find stocks to invest in, you might want to check out our other, more extensive, article on the subject: ‘How to Pick Stocks’. 

How to Buy Stocks for Beginners in 5 Steps

Now we have an idea in our heads of what you need to consider before investing in the stock market and how to find stocks to invest in, let’s look at how to buy stocks for beginners.  

In this section, we will provide a step-by-step guide of how to buy stocks using an Invest.MT5 account from Admirals. Simply follow these 5 steps in order to buy shares in your company of choice: 

  1. Open an Invest.MT5 account with Admirals
  2. Log in to the Trader’s Room
  3. Click ‘Invest’ next to your investing account in the Trader’s Room to open WebTrader
  4. In the Market Watch window on the left of the screen, search for the stock want to buy shares in. Once located, click and drag it onto the chart.
  5. By using the one-click trading feature at the top of the chart, you can select how many shares you want to buy before sending your order to the market.
Depicted: Admirals MetaTrader 5 WebTraderShell Daily Chart. Date Range: 6 September 2019 – 9 June 2022. Date Captured: 9 June 2022. Past performance is not a reliable indicator of future results. 

Pros and Cons of Stocks

Now that we know how to buy stocks, it is worth taking a look at the pros and cons of stocks as an investment. 

Pros of Stocks 

  • Investing in stocks allows you to potentially benefit from a growing economy
  • A well-diversified portfolio of stocks can be a good way of beating inflation over the long-term
  • Allows you to take advantage of a successful business in order to grow your wealth
  • With technological advances, investing in stocks is very accessible these days
  • Most shares come with voting rights, meaning that shareholders can have their say on how the company is run

Cons of Stocks 

  • As with all investments, investing in stocks comes with the risk of losing your capital. Stocks in particular are considered to be higher risk than other investments such as bonds
  • Picking the right stocks is not always easy. A company which looks successful today may not be so in ten years’ time
  • It can take a lot of time and effort to research different stocks and their future prospects, particularly if this is not a subject which you are familiar with
  • Investing in stocks can take its toll emotionally. Share prices fluctuate on a daily basis, and it is not uncommon for stocks to fall in price, particularly in the short-term. Therefore, investors considering buying shares need to be able to cope with market volatility and not feel compelled to sell low out of fear.

Different Ways of Investing in the Stock Market for Beginners 

As we have seen, buying individual stocks is not without its drawbacks and, therefore, investing in stocks is not suitable for everybody. But is there a way of investing in the stock market for beginners without buying shares in individual companies? 

The answer is yes. In addition to, or instead of, investing in individual stocks, investors can buy shares in index funds. Index funds track an underlying stock index by pooling investor money to buy shares in all the companies within the index. 

For example, an index fund which tracks the S&P 500 will use investor money to buy shares in all the companies within the index. In exchange for their capital, investors receive shares in the fund.  

Therefore, index funds allow investors to gain exposure to a number of top companies through a single investment, which is an effective way of reducing risk. This approach is likely to appeal particularly to beginner investors, who are looking to benefit from the potential growth of the wider economy rather than buying shares in individual companies.  

Furthermore, over the long-term, investments in index funds can be very rewarding thanks to the effect of compounding returns. 

Final Thoughts 

We hope you have enjoyed our guide on how to buy stocks for beginners and you have learnt a thing or two about investing in the stock market. 

Investing in stocks can be very rewarding, but in order to have a chance of becoming a successful investor it takes time, dedication and hard work. Always be sure to do your own research before buying shares and never invest more than you can afford to lose. 

Investing in Stocks FAQ 

 

How old do you have to be to buy stocks?

In the UK, US and most other countries, you must be at least 18 years old in order to open an investing account and start buying shares.

 

How much money do you need to start investing?

These days, many brokerages have low minimum deposits and low minimum investment amounts, meaning that you don’t need a vast amount of money to start investing.  

For example, with the Invest.MT5 account from Admirals, you can start buying fractional shares in some of the world’s largest companies with as little as €1!

 

Practise on a Risk-Free Demo Account 

If you want to start investing in stocks but want to practise first, a risk-free demo account is the perfect place to do so! With a demo trading account you can practise investing in real-market conditions with virtual currency, allowing you to perfect your technique before risking your capital on the live markets! Click the banner below to open your free demo account today: 

Trade with a risk-free demo account

Practise trading with virtual funds

About Admirals 

Admirals is a multi-award winning, globally regulated Forex and CFD broker, offering trading on over 8,000 financial instruments via the best Forex trading platforms: MetaTrader 4 and MetaTrader 5. Start trading today

This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.

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