How to Buy Stock for the First Time

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You don't have to start your own business to take ownership in one. Stock certificates represent an ownership stake in a company. Public companies are usually traded on a national exchange like the New York Stock Exchange. Regulated by the Securities and Exchange Commission, the world of investments and equities may seem very confusing, but with the advent of the Internet and other research tools, the process of buying stock is really quite simple.

  • Read the "Wall Street Journal" and the "Motley Fool" for a sense of what's going on in the business world.

  • Pick your stock. The most popular investment research tool as rated by Alexa.com is Yahoo! Finance. Familiarize yourself with the information available on the site. Use the Industry Center to begin your search for top-rated stocks. Try to pick an industry you're familiar with. Perhaps you like the way your employer or bank is performing in terms of future stock growth. Pick at least five stocks to invest in.

  • Analyze top prospects. Enter the ticker symbol for the company you are interested in into the Quote box on Yahoo! Finance. A ticker symbol is the one-to-four-letter word that represents the company at the national exchange houses.

  • Look up the price of one share of stock. This is synonymous with the "Last Trade" price. How much you can invest will dictate whether or not you can afford the price of the stock. If you have only $500 to invest you might want to stick with stocks that are lower priced. As an estimate for how many shares of the stock you can afford to buy, divide the amount you can invest by the current price of the stock.

  • Look at each stock's price chart. You can access this by clicking on "Chart" on the left-hand side of the pane for Yahoo! Finance. Look at the past year as well as the last 5 years to see how the stock is trending. Choose one stock to purchase.

  • Sign up with a broker. This can be on-line or physical. Popular brokers are Etrade, Ameritrade and Scottrade. You will need to fill out an application. It is very similar to applying for a bank account. Fund your account using the funding options available and place an order to purchase the stock. You will need the ticker symbol and the number of shares you wish to purchase. You will also need to know at what price you want to purchase. Have a representative to walk through the process for your first trade.

  • Enter a limit order as opposed to a regular market order. A market order is a request to purchase a stock at the current market price, whereas a limit order is a request to purchase a stock at the price you specify.

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