How Do I Buy a Single Stock?
You can buy one stock to get used to the stock market. In fact, "Forbes" magazine suggests that having most of your money in a single stock is a good way to get ahead if the stock does well. If you move deliberately to set up the access you need to the market, you'll have a tried-and-true method that you can use for investing in other stocks, or for adding more shares of that single stock.
Buying Through a BrokerStep 1
Open a trading account. You can choose a broker in a brick-and-mortar office if you want advice, but many full-service brokers charge as much as $150 per stock purchase. Online brokers let you buy a stock for anywhere from $4 to $10 per trade, though you won't get any guidance for that price. Because you want only one stock, shop around for the best trading price to preserve your investment money. You'll have to fill out forms and set up an electronic transfer from your checking account to your trading account. You can do all of this online in a few minutes.Step 2
Screen for the stock you want. Your trading account will come with a stock screener, or you can use one of the many free online screeners. You can search for stocks based on their past performance, prospects for growth, dividend payments and size of the company behind the stock, to give a few examples. With one stock, you must decide what type you prefer. Once you enter all of your criteria in the stock screener and click "Search," you'll see a list of possible stocks.Step 3
Research a few stocks. Pick some interesting candidates out of the list from your stock screener, and look them up. You can do this in the research section of your trading account, or online at sites such as Yahoo Finance or Google Finance. You can find out whether a company's sales have been rising, how much profit it has reported recently, what analysts say about it, and how it has performed in the past. Use your best judgment to narrow your stock list down to one you think will do well. Write down the symbol for that stock. Stock symbols contain three or four letters that investors use to enter purchases and sales of stocks. Enter that symbol in the "Get quote" field of your research site, and write down the last known price for your stock.Step 4
Sign in to your trading account and find the field for entering stock purchases. You will see a field for the stock symbol. Enter your stock symbol in the field. You will also see a "Buy" button. Click that. You will be prompted to choose the type of buy order you want. Choose "Limit order." This means you can limit how much you are willing to pay for the stock. Next to the limit order button, you will see a blank field where you can name your price. Review the latest price for your stock and enter a price that is 1 percent to 2 percent below that price. A stock can drop that much, especially when the market first opens. This will keep you from paying too much. Enter the number of shares you would like to purchase in the field that asks for that information.Step 5
Click "Review order." You will see your stock symbol, your limit order and the price you are willing to pay, along with the number of shares you want to purchase. Click "OK" or "Purchase." Your order goes immediately to the stock exchange, if it is open. If the stock exchange is not open, your order will go to traders on the floor of the stock exchange when it does open. Your order will be filled at that time.
Buying Directly from a CorporationStep 1
Buy shares directly from the company issuing the stock through its direct stock purchase plan. Hundreds of companies, including Ford, Disney and Walmart, sell their stock directly to investors. You can start your plan for as little as $10, depending on the company. You pay no commission for your purchases.Step 2
Reinvest periodically. Many of the companies that offer direct stock purchase plans also have dividend reinvestment plans. You can also add new funds. This is known as an optional cash purchase. Because you never pay a commission, you can add to your number of shares as often as you like, knowing that you aren't racking up costly trading fees.Step 3
Use dollar-cost averaging. If you place the same dollar amount into a direct stock purchase plan each month, you will end up with a low per-share average. If you invest say, $25 per month, you will buy different numbers of shares each time. When shares are up, you will get fewer shares. When they are down, you get more shares for your money. The result is a low average cost.
- When buying through a brokerage, you can enter a price that is much lower than 1 percent or 2 percent below the current price, if you want to try to get a bargain. If the stock doesn't drop to the limit price you name, try a new price the next day.
- When determining how much money you want to invest, remember to leave enough cash in your trading account to pay your trading fee. For example, if you have $1,000 and must pay $10 per trade, invest only $990.
Kevin Johnston writes for Ameriprise Financial, the Rutgers University MBA Program and Evan Carmichael. He has written about business, marketing, finance, sales and investing for publications such as "The New York Daily News," "Business Age" and "Nation's Business." He is an instructional designer with credits for companies such as ADP, Standard and Poor's and Bank of America.