buying shares online is the least complicated investment method available to new investors.
Investing in shares online has never been easier. Here is a step-by-step guide in how to succeed in online trading, from opening a trading account to be able to trade with a click of a button from anywhere in the world.
Investing in shares is becoming more popular as days go by and it is not hard to see why investors wish to be a part of the action as companies are archiving huge success, leaving many investors sitting in a positive financial position.
Beginning your trading journey has never been simpler and easier when investing in shares online, all it takes is finding the right online trading platform suitable for your investing needs, knowledge and of course the funds ready and available to go.
And another point to mention: anyone can become an investor at any point within their life.
Professionals know the ins and outs of the stock market from Wall Street to International markets and will know a good stock to be a part of when they see one. But this has to come down to a lot of dedication and hard work researching and being one step ahead of the game to be able to determine if a company has what it takes to be successful.
This is where the two worlds collide, as it is easy to start the journey but knowledge is the power to be able to succeed within the stock trading market.
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Let’s explore the ins and outs of how to buy shares online with this step-by-step guide in succeeding your goal of becoming an online trader, along with additional educational information that is essential to know along the way in your trading journey detailed within these next steps.
- What is a share?
- Why Invest in shares?
- How to buy shares online in 5 simple steps
- 4 steps to look at when looking into shares
- Types of investments available to investors
- Top tips for investing in stocks
- Best stocks to buy online in 2021
What is a Share?
To start it’s wise to know the difference between what a share or shares are in connection to a stock or stocks as you start to develop within the industry as these two terms are often crossed together.
A stock is simply a company in which it is traded on the open market. But sometimes it can be argued that the term ‘Stock’ means to own shares within a company, but typically the term is in reference to a company that is on the trading market.
So as mentioned a stock is a company on the open market, stocks is when you are referring to more than one company that an investor owns shares in. For example, an investor may say ‘I own various stocks’, this indicates that this investor has ownership in multiple companies.
Share or shares realistically have the same meaning. To own a share you are talking of owning a share within a specific company, when talking about shares you are referring to having ownership within more than one company, both can be used within both private and public traded companies.
Shares are the hidden secret behind what makes a stock rise in cash sums in order to pursue or continue to grow. This is where investors are able to buy shares within one or more companies within both public and private firms, although private firms may have more paperwork involved and maybe a longer process than public companies.
Then it brings us to the point of short-term and long-term shares. Both terminologies are of course referring to holding shares for either a long-term investment or for a shorter period depending on what suits your investing needs.
Short-term trading is when an investor takes a position that can last from anywhere between seconds, several days leading up to a few weeks. The main outcome for such investment is to make a quick profit from taking advantage of a stock's market price, whilst analysing stock’s data to determine how long they will potentially seek to keep a hold on this stock.
There are many different styles of short-term traders which include scalpers, day traders and swing traders. All of which seek to hold shares within a company ranging from seconds to weeks whilst taking advantage of various stocks prices.
On the flip side, long-term investing enables an investor to hold an investment for a longer period which can range from anywhere between one year to over 30 years if they wish. Investing in stock for the long-term can be extremely rewarding, so long as you do your research whilst trying to avoid ‘Hot Tips’ along the way as this can be costly even if for a brief moment when a stock is on the rise.
You can still sell long-term shares or investments along the way, it is advised if the stock is losing significantly you may decide to replace and add a more advantageous stock to your portfolio. This will allow you to not only look to seek good returns but it will strengthen your diversity within your collection and keep it fresh. But all trading should be carried out with careful consideration and be strongly researched, as a bad move could potentially end up being one of an investors' biggest trading regrets.
Why Invest in Shares?
Investing in shares boils down to an individual's needs and ambitions. It is a choice that many investors take time to confirm and research into whether this is a route they wish to explore. Definitely, if an individual is looking to become an experienced investor over the years, research and time are essential to help build a successful trading path.
The reason why many investors look to invest in shares is to simply make a big profit, and essentially is the aim for all investors besides many will also enjoy what investing has to offer. Arguably there are no better shares to own than within growth stocks, as these stocks can seek to give huge potential returns, especially over a long-term period as an investor can build great wealth if they have invested wisely.
There are other options that we will explore further as we go on that are also extremely rewarding to investors.
How to Buy Shares in 5 Simple Steps
1. Set up an account with a regulated stock broker
2. Add funds to your account
3. Research the stock you want to invest in
4. Specify the amount of shares you want to buy
5. Confirm your order
The first and key step to being able to buy shares online is to find a suitable online trading platform suited to your investing needs. On your chosen platform you will be able to obtain a broker and a trading account to be able to start your trading journey.
There are many online trading platforms on the market today which all offer various advantages to investors.
It all just boils down to your investing requirements such as if you are looking to invest in international markets including the U.S markets, trading fees is another important factor to keep in mind as some platforms have higher fees than others or some may not charge at all when placing your investments.
Lastly, customer service along with helpful and knowledgeable guidance from your online broker is also a huge benefit to have when you are an investor starting out.
An online trading platform which we highly recommend is the award-winning online trading platform, eToro.
This large, friendly online trading platform offers a mix of it all for both beginner and experienced investors.
From experienced brokers on hand to excel your trading journey, a platform that enables traders to interact with other traders to discuss various trading strategies and to explore portfolios, to arguably one of the biggest advantages this company offers investors, zero commission fees.
These are just a few of many advantages that this leading online trading platform offers; there is also ample amounts of trading educational material that any investor is able to explore whilst being able to participate in online classes carried out by experienced professionals.
The way in which it works is simple, to start you need to log onto eToro and set up your trading account.
From here it is simply a few clicks and inputted data away to be able to start your journey.
Once you have been successful in opening your trading account a deposit of $200 (£145) will be needed to start, then you are ready to begin.
If more understanding is what you require, eToro offers a virtual online trading dummy platform where you are able to participate with virtual funds to be able to create and learn the way trading operates before you go into it on your own.
5 Point checklist to help investors to invest in shares online in 2021:
1. Choose a trading platform that is suitable for your investment needs. This will include opening of a trading account which is also strongly advised to keep personal funds separate to your financial funds and a broker to be able to carry out your investments.
2. Lean, learn, learn. Learning and understanding from investment terminology to how to read charts, this will benefit you hugely to understand what is happening with your chosen stock or stocks along with what is happening in the market overall.
3. Choosing your budget. It’s wise before you start your trading journey to either make a budget plan or have a solid understanding of how you are looking to budget your investments. It is strongly advised if you are new to investing to start with smaller amounts until you have enough knowledge behind to be able to increase your budget. On the same note, investing in your financial means is also advised.
4. Research and pick your chosen companies to buy shares into. This part of the process is where it takes time to sieve through various sectors to choose which stocks are of interest. You will have mega stocks such as Microsoft (MSFT) and Facebook (FB) who are a part of the FAANG group, which no doubt investors will have some understanding of these stocks, but looking closer into the fundamentals including looking at revenue and room for growth of these stocks is still strongly advised.
Likewise, stocks that are mid-cap stocks offer great positives with stability that can give you great returns such as Peloton Interactive (PTON) and Sketchers (SKX), these stocks are great additions for beginner investors based on multiple factors as mentioned.
One the back of choosing your stock picks, take into consideration the market conditions. As 2020 has evidenced, anything is possible and could change in what feels like overnight, so it is worth assessing how stocks are sitting within a ‘bear market’ as share prices fall and additionally a ‘bull market' as share prices are on the rise.
Whilst at the beginning of your journey, it's wise to not be too adventurous and go against the bigger market trend, stick within a comfort zone whilst you're starting out in investing.
5. Ready to invest. After all of the above steps have been carefully considered and undertaken then you are ready to place your first investment.
As you will have chosen your preferred online trading platform at this stage, all you will need to do is login to your account, choose your stock you wish to invest in and simply enter an amount you wish to invest and click Buy. The process is simple, straightforward and can be carried out from wherever access to the internet is available. Then you are officially on your way to an exciting trading journey.
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4 Steps to Take When Looking into Shares
Looking into choosing your share picks may feel slightly daunting at first. But it is worth it for all investors not to rush into investing in shares right away, this could end up being costly and up leaving many regrets for investors. These key points below are factors to take into consideration in how to develop and pick your chosen shares.
- There are many sectors on the market from consumer stocks to tech stocks. Picking the sectors that are performing well is a good step, along with looking to see if these sectors could look to continue their success moving forward.
- When you have chosen a stock of interest, take a look at the stocks balance sheet. This will determine how well a company is performing and give you key fundamental evidence of what this stock can potentially bring to you as an investor.
- Then look to see how well the stock has performed over time. As time is the answer to many solutions, it is an essential factor within investing. This will give an investor an indication of how a company has performed and if the future outlook is achievable for a stock.
- If you are new to investing the technical side in terms of looking at a stocks technical analysis could also be beneficial, but take one step at a time if you are unsure at this stage of what the technical side entails you can pick this up as you go on.
To summarize, knowledge is the main takeaway point for picking the best stocks to have shares in as stated - “An investment in knowledge pays the best interest” - Benjamin Franklin.
How to Buy, Sell and Hold Shares
The next important step is to understand how investors seek to buy, sell and hold investments. These important steps are essential in your journey as they can affect your first investments and establish your way.
Buying shares for the first time can be one of the most exciting emotions you will feel when starting your trading journey.
Buying a share boils down to an investor choosing which share or shares they wish to invest in and making sure all necessary research has been carried out beforehand. Then an investor will await confirmation or look to see a live share price, select an amount or amounts you wish to invest in such stocks and click Buy. Once your broker has confirmed the investment you are officially classed as an investor.
If for whatever reason you misread and your amount is not high enough to invest in a certain stock, your broker will advise you and give you the guidance in which you are needing.
Additionally, you will also come across the terminologies of Bid and Asking prices whilst trading. A bid price refers to a price of a stock for a buyer, whereas an ask price is the price that a seller is able to accept for a stock. These terms you may see on a sheet when looking to buy shares.
Selling of Shares
Selling of a share operates in a similar way as buying a share does.
You have to select the share or shares you wish to sell along with inputting the amount you wish to sell the share for, whilst your broker will pick this up from their side. Always be mindful as you may take a loss on a share than what you initially bought it for.
The broker will then confirm and set the price of your share available on the market, alongside with an adjusted price to test to see if the stock could potentially gain. Once the share has sold your broker will confirm this to you with confirmation of how much the share sold for.
The term holding shares does not take any participation other than keeping hold of a chosen stock within your collection. This term is used for the long-term outlook for investors who seek to hold onto shares for a matter of weeks, months or even years, as a stock seeks to grow. Naturally, you need to buy into a stock first to be able to hold shares.
Holding shares can be extremely beneficial over the long-term period as stocks can gain significantly well and is also noted to be a safer form of investing, which is why it is strongly advised for beginner investors to take this route, especially as we have been sitting in a somewhat challenging market.
If you are a beginner investor who is seeking to make profits quicker, starting out with the outlook for the long-term might be the best way to start until you become more familiar with understanding the market, individual stocks technical analysis and trading within a more certain market.
Read Also: The Next Stocks To Explode In 2021
Types of Investments Available to Investors
There are thousands of stocks across the globe to own shares in, spread across various markets from Wall Street to the London Stock Exchange (LSE) to further international markets.
When it comes to different types of investment vehicles, there are many that are popular depending on the individual as they are suited for each investor's needs. Likewise, this is also the case when looking at stocks of interest as an investors strategy will suit some stocks better than others.
For example, Dividend stocks are a great addition to all investors' portfolios as these are safer investments in comparison to stocks giving investors additional income over the year. Take the S&P 500 stock AbbVie (ABBV), this stock has been a strong dividend payer for over 25 years raising over time along with continuing to hit payments on time.
But on the flip side, Dividend stocks for experienced investors may be deemed to be less of a challenge than as opposed to growth stocks because they are a safer investment.
Let's take a look into some of the investment options that are available to investors:
• Stocks - To start we have stocks. Investing in one stock is deemed to be riskier than if you were to invest in various stocks, the reason for this is due to relying heavily on just one company bringing in the results could be costly if it does not work out. Creating a diverse portfolio of multiple stocks is highly recommended when starting your online trading journey, along with investing smaller amounts spread equally at the beginning.
When it comes to different strategies such as the ones previously mentioned, this again is down to an individual investor. Some of the popular strategies used within trading stocks today are listed below:
- Active Trading - Buying and selling of shares with the aim to hold them for either the short or long-term period.
- Swing Trading - This strategy is aimed for investors who are looking to make a profit from a stock within a matter of days as prices change.
- Passive Investing - Passive investing is a strategy simplified is Buy and Hold where an investor buys a stock and keeps hold of this stock for the foreseeable.
- Scalp Trading - This strategy is a popular one amongst investors where investors will try to seek big profits from small or minor price changes.
• Dividend Stocks - Dividend stocks offer an investor a regular income stream in the form of dividend payouts paid every quarter based on a company's profits.
Dividends are deemed to be safer investments as these rely solely on how much revenue a company brings in to how much is paid out, so in hindsight, an investor will be paid every quarter. However, in some extreme circumstances, companies have been late on payments due to lack of funds being available, which is why it is important to read up on your chosen picks before jumping straight in.
Dividend players are also some of the most notably recognised companies in the world today including McDonald’s (MCD) who have been strong payer’s for many years, and Starbucks (SBUX) who are looking to be a good investment within 2021. Like with stocks investors can have more than one dividend stock within their collection.
• Mutual Funds - A mutual fund is a type of investment where it is managed by a portfolio manager which is made up of multiple stocks. These stocks have been hand picked via extensive research due to their successful performances and other advantages which is why these chosen stocks have been monitored closely by professionals.
Mutual funds can be costly as not only will investors have to pay per share to invest within these funds, but also investors may incur yearly management fees and additional charges on top to factor into consideration as this could take up profits that an investor has made.
Investing and selling in Mutual funds normally takes place at the end of a trading day, as this is when these funds are valued.
• Exchange-Traded Funds (ETFs) - ETFs have become popular over recent years with investors.
As previously mentioned ETFs are very similar to Mutual funds but the only clear difference is that EFTs trade throughout the day instead of at the end of each day.
ETFs have also been classed as a safer investment in comparison to other investment types as they benefit from lower costs along with strong exposure to a ‘basket’ of stocks. Including having access to emerging markets, individual businesses and more. All with the additional benefit that these stocks are easier to invest in.
These investment types mentioned above are the most popular investment vehicles used frequently and commonly across the world today. However, there are still many alternative investment types that are also available to investors which include Hedge Funds, Private Equity Funds, REITs, ISA accounts and many more.
If you are a beginner investor it is wise to stick to one of the popular forms of investing to start out until you feel more at ease to experiment and challenge your knowledge within the online trading market.
Check Out: Top FTSE 100 Stocks To Buy
Top Tips for Investing in Stocks
Before we look into the best stocks to buy on the market and a guide in helping you conduct undertaking this step, we have collected some essential top tips for investing in stocks to round up and takeaway to remember to carry with you through this exciting journey.
Have the right mindset
The first top takeaway is an essential element to always have or try to have when seeking to invest in shares. Take your time to conduct as much research as possible crossing all angles rather than jumping into shares based on your emotions. Take your time, breathe and look into all statics advised on your chosen stocks.
Set your budget
Setting a budget is vital as an early step into your trading. Setting aside your personal liabilities separate to your trading funds is strongly recommended as shares can be costly to invest in. Additionally, if you end up taking a loss and seek to invest further, having spare funds set aside within your trading budget will determine how much you can place within shares of interest comfortably moving forward without having the risk of becoming in debt.
Have a plan B
This step goes hand-in-hand with owning shares instead of solely holding a share within one company. If you hold a share within a company that does not go to plan, that can leave an investment at a cross-point as where to head next. It is wise to always have a plan B of which route to take after. Your alternative plan could be that of an additional share in a stock of interest or alternatively this may lead you to seek shares in multiple stocks, which is one strong reason why this route is highly recommended.
Learn from errors
The last takeaway point may be a hard pill to swallow for some investors but it is an important trait to adapt even if you are successful yet encounter the odd one or two errors. All investors can learn from errors, and try their best to overcome these errors so that they will not happen again. Realistically it is human nature for errors to happen and it can be rectified from going over and analysing why and where the failure occurred.
Best Stocks to Buy Online in 2021
Now that we have reached this stage in having a good overview of how to invest in shares online in 2021 and what investing in shares entails. Now it's time to look into what shares to buy and how to go about buying into your chosen stock picks.
Of course, we can’t tell investors which stocks to invest in, but we can advise on what the best stocks for beginning investors to consider are, as each investor has different needs in what they will look for within a stock. Alongside, we have also given a guided 4 step plan for beginner investors to help make their choice of shares a little easier now that we have assessed how to invest in or buy shares online in 2021.
4 Shares to Buy In 2021
Here are 4 strong and reliable stocks on the market today that offer great and solid returns to investors along with these stocks being safer security nets for beginner investors.
1. Apple Inc (AAPL)
With a market capitalization of over 2 trillion, Apple Inc (AAPL) has been a fantastic stock over the years and continues to shine as being of the top mega stocks on the market today.
Apple continues to bring in a solid revenue, in 2020 reaching an increase of just under 10% year-over-year to $294.13 billion for the twelve-month period ending on December 31st 2020, with annual revenue up by 5% to $274 billion over the year.
This stock is a leading tech stock as it continues to develop leading products such as iPhones, iPads and Macbooks whilst adding additional avenues such as Apple watches, Apple Tv’s and in recent days the announcement of seeking a new route of entering a new sector into the automotive industry in producing electric vehicles embedding with Apple software.
2. Microsoft Corp (MSFT)
Microsoft Corp (MSFT) has been a notable stock for many beginner investors for many years and continues to be one. Although this tech stock is no longer the largest company in the world, as it once held this title, now sees AAPL taking the edge over this stock.
Nethertheless, MSFT still delivers a strong and solid performance and holds the title of being the third-highest global brand valuation. As remote working is vastly becoming the new norm and Microsoft software being one of the go to software for many, this stock is going to continue to strongly benefit as the years continue to evolve.
Microsoft Corp will continue to acquire new companies driving its impressive revenue to new highs. As of 2020 Microsoft rose just under 14% year-over-year in revenue to $143.00 billion.
3. Spotify Technology SA (SPOT)
The Swedish streaming and media provider is continuing to add subscribers to its popular platform from all over the globe, with over 140 million subscribers to date, up by almost 31 million subscribers over the year.
Included within the streaming and media services include podcasts and more which have been the successful driving force behind this stock's success.
Another strong force for this stock is the evolving smartphone sector as Spotify dominates within its smartphone app, this avenue is only set to grow at such a speed leading into the future but it could be a stock to take many investors by surprise.
4. Walt Disney Co (DIS)
The last of the 4 stocks to own shares in is Walt Disney Co (DIS).
The entertainment company who has had a tough year due to the Covid-19 pandemic is still a leading stock to own shares in, especially at the moment as theme parks, cruise liners and stores have all been either closed, in operational or at reduced capacity for many months causing the stock to decline.
Today this stock is sitting in a better position to buy into in 2021 before avenues once again start to re-open. Besides the above, Disney also has their hands in streaming services including Disney+ which has been a shining positive for the stock in 2020, with 95 million subscribers within 2021 up from 70 million at the start of 2020.
The above 4 companies are just four of many of the best stocks on the market to be a part of today for both beginner and experienced investors. But if more guidance is what you are needing to start choosing your shares, let’s take a look at the starting guide below.
Step 1 - Set yourself a realistic investment goal
Being realistic is the first trait any investor needs to be in possession of. Whilst its wise to have dreams of reaching unspeakable levels of wealth it does come with the realisation, with the realisation being that it will take time and hard work to reach this level but is not unachievable.
Depending on what your investing aim is certain trading strategies are going to be more beneficial than others. For example, if you are an investor who is looking to gain great wealth over a long period active trading, ETFs or Mutual funds may be better suited for your investing needs.
Additionally if making money quickly is what your main aim is investing in Dividend stocks or looking into Swing or Scalp trading might be better suited. There is no right or wrong way to invest in shares, it solely goes down to the individual but it is a good start to begin with establishing what you are looking for before you explore the next steps.
Step 2 - Look into what is happening within the market and look at the broader market trend
Once you have established your style of investing that is best suited, next it is time to look at what the market conditions are telling you. For example, within a bear market (a declining market) some investment strategies will not be the best strategies to undertake, as this will more than likely cause loses and or little returns which is advised to stick to safer defensive strategies such as Inverse exchange-traded funds (EFTs) as these funds will benefit from declines.
Short selling is also a good strategy to take in a declining market as you can benefit by borrowing shares with a stock, selling them and buying back at a lower price. Although such trading can be extremely risky especially if you are a beginner investor.
On the positive side in a booming bull market, naturally, most strategies are beneficial to all investors and there is not one specific best strategy to pick out as it solely depends on the investor's needs. EFTs are becoming very popular and allow investors to have a great mix with solid returns in both public and private firms. Additionally, active trading is still always a good solid route to go down not just as a beginner investor but throughout your trading journey.
Step 3 - Consider both the positives and risk elements of a stock
When researching into your potential stocks of choice, whilst is recommended you look for the strong positives including a stocks revenue, solid balance sheet and various metrics. The biggest factor to look out for within a stock is to look at the risk elements.
Although some stocks have blossomed especially over the past year when you look deeper into various stocks you may see that there are many risk elements. If a stock holds high levels of debt, has seen solid declines in the past but has benefited over the past year to new normal measures, these are two risk elements to factor into your decision making.
If dividend stocks end up being stocks of interest also be wary if a stock has had to dilute dividend payments or due to various reasons, this is another strong indication on how well a stock is or has potentially performed.
A good way to seek the risks of stocks is to conduct a risk assessment. This will take time and understanding but if you are a beginner investor who is looking for a long-term career within online trading, carrying out a risk assessment will be beneficial as you sharpen up your knowledge for the start of your journey and for future investments.
Step 4 - Stick to the larger stocks at the start of your journey
The last point to discuss when starting your journey into investing in shares as a beginner is to stick to larger stocks at first either by buying and holding or trading these large-cap stocks.
Although these stocks can be costly, there are also the safest and easiest to trade when you are starting out. The reason for this is because these blue-chip stocks, although offer growth potential they are at such a level where growth is marginal in comparison to other stocks where bigger profits can be made for experienced investors which will see these stocks trade highly throughout both the day and in the long-term period.
Whilst blue-chip stocks are strongly recommended when beginning your journey, if you are an experienced investor such stocks may also be of interest to keep and hold in your portfolio for the long-term, as these stocks offer great diversity, growth opportunities and continuing to bring in good profit.
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If you want to invest in the stock market, learn trading with these five steps:
1. Open a stock trading account
2. Take a trading course on the stock market
3. Research the stock you want to trade
4. Learn to analyze
5. Practice trading
- How to invest in shares online in 2021 is simple, easy and becoming more popular as we head further into a fast paced lifestyle.
- Investing in shares online in 2021 enables investors to be able to invest in shares from anywhere in the world.
- A share or shares is an ownership in one company or multiple companies.
- Stock or stocks can also be referred to as ownership within many companies, with the term stock being referred to as a company or an individual share.
- Depending on your investing goals, choosing the right online trading platform is essential when starting your trading journey, to make sure all your investment needs are covered.
- Growth stocks offer high potential profits to investors and develop stronger the longer an investor holds a stock.
- Additionally, there are other investment types that investors can look to invest in via an online trading platform, without having to stick solely to stocks.
- All investments come with their own risk elements, which is why it is highly advised to spend time to research along with investing sensibly within your chosen stocks to deliver a successful trading journey.