How To Buy Shares
By: Anne Durrell
How to buy shares of stock is actually quite simple, you can call up a large brokerage house and tell them that you would like to drop in to buy shares, and they will gladly accommodate you, as well as tell you what they need from you in order to fulfill your desire. They will, of course need all the pertinent information about you, including who you work for, your full name and address, as well as your social security number. They will need your bank account number and what bank you deal with.
It may help you to understand what shares of stock actually are. Various business corporations may sell shares of their company in order to raise capital. The first time it does this, is referred to as an IPO, which means initial public offering. Stock actually represents a percentage of that corporation, thus if you buy 1 share of stock offered as 100 shares, you are in effect buying 1% of that particular corporation ownership.
How to buy shares as told above requires a brokerage house. There are two different categories of brokers, full service brokers, who because they will give you advice about stocks will charge you a high commission in order for you to make your purchase, and discount brokers who give out no advice, but will handle the sale for a very reduced amount of commission. Many of these are available online if you wish to perform your own searches for them.
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How to buy shares also involves what kind of investor you wish to be. If you are banking on the future growth of a company, you are going to be a growth investor, but if you are desirous of keeping the value of your investment or wish a return on your money, then you are probably a value investor, also known as a dividend investor.
Most value investors count on the temporary situations that may have brought a stock down, and also count on those problems to be fixed in the future. Those wishing dividends, do well to invest in highly proven companies with a good history of paying dividends.
That means that the price of the share is divided by the last 12 months of sales per share. Finally there is price to book or PB, which refers to the company's assets less its liabilities.
How to buy shares also involves knowing the lingo. A buy is a market order to purchase so many shares at such and such a price. You may express a buy limit order to make sure that you do not buy at a predetermined high price. A sell can also have a limit order on it to stop the sale at dangerously low prices. Selling short involves the dealing with margins which are in effect credit.
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