How To Invest In Stocks Online For Beginners In 2023

Do you want to learn how to invest in stocks for beginners? This comprehensive guide will teach you everything you need to know about stock investing. By the end of this guide, you will have learnt where to buy shares, the best shares brokers today, how to research stocks, and the top stocks to watch in 2023.

Stock investing, if done correctly, is one of the most effective ways of building long-term generational wealth. It is the cornerstone of financial independence. And millions across the world have relied on them for over a century to own a percentage of highly profitable companies and grow their capital in the process.

But how do you start investing in stocks online today? Here is a detailed beginner’s guide to stock investing in 2023.

 

Your capital is at risk. Other fees apply.

Below, we will cover these steps in detail and tell you about the best trading stock apps for 2023. We will also tell you how to find the best stocks to invest in and introduce you to top stocks that you should consider investing in in 2023.

Step 1. Choose A Broker For Stock Investing

The first step to investing in stocks online is finding a suitable broker. For starters, we recommend that you only create a stock trading account with a highly regulated and reputable broker.

There are countless other factors that you ought to consider when looking for the best stock broker. For example, they should list as many stocks as possible, maintain highly competitive trading fees, have affordable deposit/trading minimums, and guarantee the security and safety of client funds and personal information.

To help you get started, our analysts have vetted tens of highly popular and reputable trading platforms. Ultimately, they settled on the following two as the best places to buy shares in 2023.

1. eToro – Best Stcok Exchange in 2023

eToro is one of the most popular stock brokerages in the world today – used by 25+ million share investors. A number of factors help it stand out, including its beginner-friendliness and its straightforward account opening and share trading processes. But even more importantly, it is highly regulated, has a solid reputation for reliability, supports fractional share ownership, lists 3000+ shares, and is quite affordable.

The broker, for example, doesn’t charge a commission – only highly competitive spreads, averaging 0.20% of the trade amount. To start investing in stocks via eToro, you will only need to deposit a minimum of $10. The broker supports a wide range of payment options – including bank deposits, credit/debit cards, and even PayPal. It doesn’t charge deposit processing fees and withdrawals attract a $5 fixed processing fee.

Additionally, eToro operates one of the most user-friendly trading platforms. This starts with a smooth client onboarding process that pours into a highly navigable and beginner-friendly trading interface. It is rich in educational content and also gives you access to a free demo account loaded with $10,000 in virtual funds. Plus, the platform is available as a web trader and on the go in the eToro mobile trading app.

eToro also stands out as the best share broker for beginners because of its copy trading feature. This makes it possible for beginner and intermediate investors to make money even as they learn how to trade. You only have to activate the automated copy trading feature that mirrors the trade settings of highly successful stock traders in your trading account. But to start copy trading on the brokerage, you will need at least $200.

Your capital is at risk. Other fees apply.

2. Webull – Best Commission Free Broker for US Stocks

Webull is an American-based stock brokerage hailed as one of the best share trading platforms for beginners because of its affordability and user-friendliness. Like eToro, Webull doesn’t charge a broker commission for stock investing. It only maintains a highly competitive spread and no other trading fees. The only other charge you may have to contend with when using Webull is the deposit and withdrawal processing fees of $8 and $25 – for bank transfers.

The broker then maintains one of the most user-friendly trading platforms. It, too, maintains a straightforward client onboarding process that only takes a few minutes. This, then, pours into a highly navigable and beginner-friendly interface – rich in educational content. You also get to interact with a growing number of trading, analysis, and risk management tools geared toward protecting investor funds. These include hard stop and negative balance protection.

Webull also supports fractional share ownership. It doesn’t even have a minimum initial deposit limit. The minimum investment amount, however, starts from $5.

Other factors that make Webull one of the best places to buy stocks in 2023 include its support for a large number of shares. Here, you can interact with 5000+ shares (both US-based companies and international ADRs). Additionally, it is preferred by beginners looking to invest in stocks over the long term because of its support for IRA investing.

Your capital is at risk. Other fees apply.

Step 2: Research For Stocks Investments

After identifying the best shares brokers, you now need to learn as much as possible about the stocks you wish to buy.

In this section, we will tell you how stock investing works and introduce you to the different ways of finding the best stocks to invest in today. We will also tell you about the five best stocks to watch or buy in 2023.

How Does Investing in Stocks Work?

Here is everything you need to know about investing in stocks online as a beginner. These are the things you need to know before you consider stock investing.

1. You are acquiring percentage ownership of the company

Here is the basic background t stock investing. When companies want to raise capital to either scale operations or other uses, they sell the company to the public. Every buyer gets to own a percentage or share of the company – hence the name shareholder. Stock investing, at its core, refers to buying a share/fractional ownership of a public company.

Here is an example of how this works:

Let us assume Company ABCD has 2 million shares in circulation.

You decide to buy 2000 of these shares.

This implies that you own 0.001% of the company.

You, therefore, are entitled to 0.001% of the profits made by the company (known as a dividend) and inclusion in making key decisions (depending on the type and privileges accorded to your shares).

2. Market capitalization

Market capitalization refers to the market value of a company that you are interested in. It is calculated by multiplying the total number of company shares in circulation by the value of each stock.

Here is an example:

In the example above, we have already stated that ABCD has 2 million shares.

Let us now assume that each of its shares is currently trading for $1000.

This gives ABCD a market cap of $2 Billion.

But why is the market cap important when stock investing? For starters, it tells you about a company’s size and sometimes its position in the market/industry in which it operates. This can then be used to assess the volatility of this company’s stocks.

Large-cap companies (those with a market cap of $10 Billion) are less volatile as they typically are established companies that mostly dominate the markets/industries in which they operate.

Here is another example:

Large-cap tech giants like Alphabet, Microsoft, Apple, and Amazon – all of which have a market cap exceeding $1 Trillion – are less volatile and have a higher/faster rebound rate than small-cap tech companies like Peloton or Inseego.

3. Share price

Before investing in any company, there are two key factors you need to consider. First, you need to learn how the stock has performed in the past and the different factors that influenced its price action. You also need to learn how different factors will influence the stock’s price in the near and long-term future.

Learning the stock’s price influencers is crucial as it plays a crucial role in shaping your decision to either buy, sell, or hold on to company shares.

4. Stock exchanges

You also need to understand that publicly traded companies are listed and traded on stock exchanges. Different countries have a varied number of stock exchanges.

In the US, for instance, there are two primary stock exchanges, i.e., NYSE and NASDAQ. The NYSE lists shares for virtually any type of company operating in the US.

NASDAQ, on the other hand, specializes in technology stocks. International companies that are traded in the US stock exchanges are often referred to as ADRs (American Depository Receipts).

5. Stock trading hours

In the US, stock markets operate between 9.30 AM and 4.00 PM (Eastern Time) – from Monday through to Friday. For the longest time, this was the only time you could buy and sell stocks. This time period also records some of the highest trade volumes for different stocks.

Today, however, the number of online trading platforms that offer after-hours trading has been on the rise. These allow you to buy and sell stocks before markets open between 4.00 AM and 9.30 AM (ET) and after markets close between 4.00 PM and 8.00 PM (ET).

We, however, wouldn’t recommend trading after hours for beginners. The markets are often quite volatile, and the stock trade volumes are relatively low.

Your capital is at risk. Other fees apply.

How To Find The Most Popular Stocks To Watch?

You now understand where to buy stocks in 2023. We have also provided you with a detailed guide to how stock investing works. In this section, we will walk you through the stock selection process and teach you how to pick a stock to invest in.

You probably already know that there currently are thousands of stocks listed with the NASDAQ and the NYSE. There are countless more listed with international stock exchanges that online brokers give you access to.

How, then, do you find the best stock to invest in today? In this guide, we will tell you the different strategies for finding the best share and stock to invest in today.

Based on the type of stock

The thousands of stocks listed with different exchanges are grouped into different categories. Some of the more popular categories include Bluechip stocks, mid-cap stocks, tech stocks, low-cap stocks, growth stocks, dividend stocks, and more.

Bluechip companies refer to large-cap companies that have established themselves as leaders in the markets or sectors they operate in. Examples of Bluechip stocks include JP Morgan Chase and Visa.

Bluechip stocks, unlike their small and medium-cap counterparts, aren’t as volatile – especially during periods of high market volatility. They also carry less risk. The only downside to investing in Bluechip companies is that their upside is relatively limited.

Based on the stock sector

You may also want to invest in stocks based on the sector of the economy in which they operate. Currently, there are 11 stock market sectors that you may consider investing in, and they include:

• Materials
• Real estate
• Energies
• Financials
• Consumer Staples
• Consumer discretionary
• Healthcare
• Information technology
• Industrial
• Utilities
• Communication services

All these markets have their fair share of strengths and weaknesses, and there are two primary ways of engaging this market. For starters, you may consider zeroing in on a specific sector or market. Note that this is only recommended to beginner traders who have a deep understanding of the market/sector operations.

Alternatively, you may consider diversifying your portfolio and investing in multiple stocks drawn from multiple sectors of the economy. This is recommended to all beginner share investors because it ensures your positions aren’t overexposed and also mitigates your risk.

Based on stock performance

You may also want to choose stocks to invest in based on their performance, particularly in relation to their peers. This implies comparing the performance of a specific stock in relation to its peers, which could be the industry in which it operates, the country, or the exchange in which it is listed.

Here is an example:

In the last 12 months, for instance, Exxon Mobil grew its share value by more than 55%.

In comparison, the NYSE composite - in which it is a component - has lost 6% of its value during the same period.

Based on valuation

Lastly, you could pick up a stock to buy based on its valuation – or that of its anchor company. In this case, you will want to buy and invest in undervalued stocks (shares whose market price is lower than their actual worth).

There are two ways of confirming whether a company’s stock is undervalued. First is comparing its P/E ratio with that of the industry in which it operates. For instance, if the P/E ratio of the tech industry is 40 times and the stock you are interested in has a P/E ratio of 30 times - it is said to be undervalued.

A stock price’s reaction to recent market or company events may be used to determine whether a stock is undervalued. For example, if company stocks crashed recently after a recent negative report on earnings or a stock market crash, it can be said to be undervalued.

Most technology stocks, including Amazon, Tesla, and META, are currently trading at heavily discounted prices. The extended bear market that dominated the markets throughout 2022 crashed their prices.

Your capital is at risk. Other fees apply.

Best 5 Popular Stocks To Watch In 2023

Aren’t sure of the best stocks to invest in in 2023? Our analysts have vetted tens of massively popular and hugely promising stocks, eventually settling on the following as the five best companies to add to your watchlist today.

1. Amazon – Overall Best Stock to Invest in 2023

Amazon stands out as one of the most resilient and lucrative stocks of all time. Since its establishment, for example, AMZN stock prices have rallied by more than 175000%. Its stock price is also up by 50% in the last 5 years, even though it tanked 39% in the last 12 months.

Moving forward, a recovering stock market, Amazon’s continued domination of the retail industry, and the possible return of Jeff Bezos as Amazon CEO are all expected to trigger possible recovery for the stock.

Your capital is at risk. Other fees apply.

2. Tesla – Most Popular Electric Vehicle Manufacturer

Tesla has been one of the most profitable companies of the last five years, having rallied by close to 500%. Throughout 2022, however, it lost more than 70% of its November 2021 peak prices. It recorded a disappointing price action despite impressive car sales volumes and revenue gains.

Much of the losses could be attributed to a bear market and the negative press around both Tesla and Elon Musk. You need to add TSLA to your watchlist because as soon as the market starts recovering and investors start overlooking the negative press, Tesla stocks will rebound and possibly rally to all-new highs.

Your capital is at risk. Other fees apply.

3. Pfizer – Popular Value Stock

Pfizer is a century-old pharmaceuticals and biotechnology company. It shot to popularity after 2020 when it designed and successfully manufactured one of the earliest covid-19 vaccines. In addition to the vaccine, the company is involved with multiple other pharmaceutical and biotech discoveries that will continue propelling its stock price to new highs.

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4. Constellation Energy Corp – Most Promising Stock in 2023

Energy stocks have been one of the largest benefactors of the 2022 market meltdown. Constellation Energy, for example, had its stock price rally by as much as 100% in the last 12 months. But even before the energy crisis that led to these gains, it had in the 5 years prior rallied by more than 85%.

Heading into 2023, the war in Ukraine, cut down on oil production, price cap on Russian oil, and depleting federal energy reserves, are all expected to exacerbate the energy crisis leading to higher highs for energy stocks like Constellation Energy.

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5. Alphabet – Popular Growth Stock

Alphabet, the parent company for Google and other bets, wasn’t spared by the bear sentiments sweeping across the stock markets. By the first week of January 2023, it had shed close to 40% of its November 2021 peak prices.

Heading into 2023, several factors have investors convinced that Alphabet’s rebound will be swift. These include its overall uptrending stock price history – having rallied 3000%+ overall and 60% in the last 5 years – its proven resilience, a large number of growing subsidiaries, and solid finances.

Your capital is at risk. Other fees apply.

Are Stocks A Good Investment?

Are stocks worth buying today? To help you answer this, we have identified a few reasons why stocks are a good investment, and they include:

• Stock investments offer more lucrative returns than other asset classes as savings accounts and bank CDs. Both the 1-year and 5-year CD rates between 2010 and 2020, for instance, remained below 2.5% per annum. The S&P 500 returns, on the other hand, averaged 14.7% annually during the same period.
• Unlike such other asset classes as options and other derivatives, you don’t need prior trading experience to start investing in stocks.
• Stocks are also a better investment than other assets, such as real estate and treasuries, because they are more liquid.
• You may also want to invest in stocks because they are easier to diversify.

Your capital is at risk. Other fees apply.

How To Invest In Stocks – Tutorial

To keep things simple, we recommend choosing a regulated stock broker like eToro. With an eToro trading account you can invest with a minimum deposit of just $10, enjoy social and copy trading tools and invest in other assets like cryptos assets.

1. Sign up with eToro

Head to eToro.com. To get the ball rolling simply click on ‘Join Now’ and fill in a few personal details such as name, email address and then choose a secure password for your brokerage account. Alternatively you can sign up with your Google or Facebook account.

2. Verify your ID with eToro

As part of being regulated by top-tier financial authorities, eToro requires all new users to comply with standard KYC procedures. This is a simple process in which you simply need to upload copies of your passport or government issued ID and proof of address. This can be in the form of a recent utility bill or bank statement.

3. Deposit Funds to Invest In Stocks

You can deposit funds in different ways at eToro, including the major ones: USD, GBP and EUR. A currency conversion fee applies to all deposits that are not in USD. No deposit fee is charged otherwise (in marked contrast to many crypto exchanges).

4. Invest in Stocks with eToro in Seconds

First, find the stock you want to invest in on eToro. Enter the code of the stock in eToro’s top toolbar.

Press on the Stock Code logo to access it; here you can review stats, research and get into some powerful charting options. Press the blue ‘Trade’ button when you are ready to buy and invest in.

Simply enter how much you want to spend and press ‘Open Trade’. The money will be taken from your eToro account and your brand new shares added to your eToro portfolio. 

Your capital is at risk. Other fees apply

Tips For New Stock Investors 

As we have now discussed all the general basics of how to invest in stocks, the best stock options and why you should invest in stocks, here are three key tips that beginner investors should strongly consider before starting their journey: 

• Consider a Robo-advisor or invest in an ETF to begin with. By looking into these two options at the start of your journey you are enabling yourself to be exposed to an array of investments but at a much safer cost than if you were to invest straight into individual stocks alone. This is because both are professionally managed and all that is required from an investors side is to place funds into the account to operate activity. 
• Consider opening a high-yield savings account. As your investing journey moves forward, in time you will more than likely make the move to invest in individual stocks alone. This is why it is wise to open a savings account and set aside funds to save up for reinvestments or new investments whilst building income off the back of interest rates. 
• Don’t get carried away. The last point is one of the most important points when you're a beginner investor is that it can be easy to get carried away with excitement. But by keeping a tab on your spending it will not only be a wise move but also will prevent you going into any debt which then can be more costly when you are then liable to pay out more outgoings, especially if these are subject to interest rates if you have outstanding debt on credit cards

Different Types Of Stock Investments

There are plenty of different stock investments available on the market that all hold their own advantages for investors, along with some of these major assets holding great risk elements over other stock investments. Let’s take a look at the four primary ways investors can hold stocks within their portfolio along with some pros and cons that these stocks offer: 

1. Individual Stocks

If you are unsure of what a stock is, a stock basically represents a share of ownership of a company. When an investor owns a share or multiple shares investors are entitled to receive gains that the stock has made from its profits it has produced. Investing in individual stocks is the most common and the simplest way to invest in a stock, and the most common form of investment that beginner investors typically look to when starting out within their journey. 

Stocks like Amazon Inc as you may already be aware are hard to come by, but that doesn’t mean that there won’t be stocks that can archive impressive growth. But the strong disadvantage of investing in just one individual stock is that it holds stronger risks as investors are holding out for this one stock to perform.

For that reason, this is why investors should look at diversifying their portfolio with a good limit of maximum 10 stocks to start in order to limit risk elements as they look to gain good returns. 

2. Dividend Stocks

A dividend is a regular payment that is paid from the company’s earnings that is then paid to a class of the stock's shareholders. Dividends can be paid in different forms which include cash dividends or dividends that are issued as further shares to investors, but keep in mind that not all companies pay dividends. 

These investments hold many advantages with the first one being that dividends provide investors with a regular income stream which typically gets paid out quarterly. Secondly, dividend stocks look to reinvest their earnings in order to create further growth which also means that the returns can be potentially greater for shareholders, especially in the long-term outlook.

Lastly, these stocks tend to be sitting in a good cash position in order to execute and deliver future growth making these stocks in some way an even safer investment in the long run. 

A good metric to look at when looking at dividend stocks, aside from looking at a stock's fundamental analysis is to look at its dividend yield. A stock's dividend yield enables investors to see what percentage it is returning to shareholders, so if a company has a high-dividend yield the more money investors will receive.

A good example, in this case, is the biopharmaceutical company AbbVie Inc (ABBV) as the stock holds a 4.45% dividend yield and holds a YTD return of 11.3%. 

On the flip side, dividend stocks may not appreciate as well as growth stocks and stocks that pay dividends can look to cut or withdraw their dividend altogether if they wish. But in reality, this would normally not happen unless in extreme circumstances. 

Top tip - Be aware that not all high-dividend yielding stocks are good stocks to invest in. Some companies will look to increase their dividend in order to make the company look more attractive to investors, yet that specific company may be sitting in an extremely bad situation. Make sure you carry out additional research before jumping to invest, if something seems to be good to be true, in most cases that is because it is - it pays to be wise. 

3. Exchange-traded funds (ETFs)

Exchange-traded funds or ETFs are a portfolio of stocks that tracks indexes such as the S&P 500 and other leading indexes. These stocks trade just like individual stocks on the market throughout the day and can contain various types of investments including bonds, stocks, commodities and more. Likewise, there are also ETFs that are made up on investments that are based in certain industries like the bank industry or in different countries. 

ETFs are great investments for beginner investors as they provide strong diversification as they are a collection of various assets and they also provide lower costs for investors in regards to brokerage fees, as you are investing in one asset to gain a collection rather than individually paying on different assets.

Based on the fact that ETFs are passively managed to follow indexes, these are often used by robo-advisors and professional investment managers in order to create a portfolio collection for investors. 

If you are looking to begin your journey into stocks, ETFs are highly recommended assets that all investors should consider to invest in at the beginning of your journey, as you further build your knowledge of investing in individual stocks. 

Read Also: Top FTSE 100 Stocks To Buy

4. Mutual Funds

Similar to ETFs comes mutual funds. A mutual fund is another investment vehicle that holds a collection of stocks. These funds do work similarly to ETFs with the key differences between the two being that mutual funds are more actively managed meaning that a fund manager will buy and hold stocks within the fund that are looking to outperform leading to show stronger returns. Likewise, this also means that stocks are bought and sold more frequently as opposed to ETFs. 

Secondly, mutual funds do trade at the end of each trading day whereas ETFs are available to trade throughout the day like stocks. 

Due to these stocks being professionally managed this does come at a higher cost ratio which reduces the funds overall payout. From the moment you purchase a fund to the point of selling, these funds do hold fees of between 0.50% up to 3.0% of the value of the fund. This is regardless of how a fund performs leaving these investments to be expensive if a fund does not perform well, reducing investors overall returns. 

Conclusion – Invest In Stocks Online

In this guide, we have discussed everything you need to know about how to invest in stocks online today. We have also discussed how to pick stocks and introduced you to what analysts considered the most popular stocks to watch in 2023.

Stock investing doesn’t have to be complicated. You don’t even need prior trading experience to start buying stocks, especially when such popular brokerages as eToro support copy trading. They have also oversimplified the entire stock investing process – right from account creation to portfolio creation.

Want to start investing in stocks immediately? Start by registering a share investor account with a regulated broker like eToro, fund this account, identify the stock you wish to invest and hit the ‘BUY’ option. 

eToro – Buy Top Stocks With 0% Commission

Open an account with eToro, deposit some funds with USD, and finally – buy Shares from just $10.

Your capital is at risk. Other fees apply

Read More:

• How To Buy Stocks On eToro
• The 10 Best Stock Trading Apps
• 10 Best Shares To Buy In The UK