Guide to Buy Stocks

By: Josh Neumann

Today, many people want to know how to buy stocks to increase their net worth. When it comes to making your purchase, there are several options available today. In the old days, you had to call up your financial advisor or stock broker and let them place the order for you.

They would then phone in your order to someone on the stock exchange, who would locate a stock holder of that company willing to sell those particular shares to you. That was then; this is now. Nowadays, you can almost always make the purchase yourself via the internet.

Very simply, today there are many websites that allow active trading for a minimum fee. Keep in mind, however, that for each transaction you pay a fee. Many an investor has lost a great deal of money active trading, by merely being forced to pay a fee for each transaction.

While the fees generally don't seem like whole lot (1-2% of the total) they can add up in a hurry when you are making a lot of transactions; especially if your investments are losing money or barely breaking even. The best strategy is to only buy a stock when you are sure it's a sound long term investment. This way, you don't have to pay the fees associated with active trading, and you also have much less risk from the day to day wild swings of the market.

How can you be sure of it's long term worth? While there are certainly several ways to go about doing this, the essential skill you need to have is knowledge of how to read a financial statement of a company. Very simply, you need to determine how well a company has been doing over the past ten years.

This is probably the most important factor, because if a company has been running profitably for at least ten years (preferably more) they are a good bet to keep doing well. These are usually not the stocks getting all the hype; very simply, most investors like the fly by night companies that have the potential to spring up and make a million bucks overnight. unfortunately, you will most often lose more money with these companies than you will ever make, because of the uncertainty factor.

Of course, you can still go through a traditional stock broker to make your purchase. Remember that they are paid by commission for each transaction they make.

Often times, they will try to encourage you to buy a particular stock, even if the outlook isn't particularly profitable, so they can pocket some money for the transaction. Never trust a broker for your financial future; you need to know how to do your own research and determine which stocks are the best pick.

The bottom line is there are several methods for how to buy stocks. You can either invest online or through a broker; but, no matter which method you elect to pick, make absolutely sure that the company you are investing in has good profits for the foreseeable future.

Avoid active trading when buying stocks, as that can be a very risky proposition. Active trading is similar to gambling; very few active traders ever win long term investing in stocks this way. Do your research, find the stock that's right for you, and only then should you worry about how to buy stocks.

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