Different Ways You Can Invest In Stocks

If you have decided to explore the many opportunities of investing in stocks, here are the different ways you can start doing so.

Much has been said about the advantages of investing in stock. We have spoken about the exponential benefits of investing and holding on to a long time horizon, how growth and value investing makes all the difference in capital appreciation, and how time plays a huge role in your investment.

By investing in stocks, you become a shareholder of a company and your funds are used in facilitating the launch of new products, helping the company expand into new markets or penetrate existing ones, and even in terms of the physical expansion of their facilities.

If you have decided to explore the many opportunities of investing in stocks, here are the different ways you can start doing so.

Direct Investment

There are situations where you can purchase stocks directly from a company without even using a stock broker. A great example of this is how employees of a company can purchase shares of their company or how companies who have existing shareholders, give those shareholders direct stock plans like stock options or warrants.

This is known as a dividend reinvestment plan and it allows you purchase more shares of a stock you already own. The advantage of this is that you save money on commission that you would have typically paid a broker. Certain fees might exist, however. As a result of how direct it is, many companies would set a minimum investment amount.

Through A Stock Broker

The role of a stockbroker, at the barest minimum, is to buy stocks or sell them on behalf of his or her clients. However, there are situations where your broker can advise you based on investment analysis and their understanding of the market on which stocks to buy to get the best return for your money.

It is, however, important for you to seek out advice from trusted business advisors after carrying out your own analysis bearing in mind your time horizon and risk threshold. Brokers would help you buy and sell shares for a fee which is known as a commission.

Online

The rise of the internet revolution has also affected stock investments. A number of online platforms and brokerage firms exist where you can buy and sell stocks with your phone or your computer.

The brokerage firm serves as an intermediary between you and the company whose shares you want to purchase. These platforms also charge a commission on services provided on every trade.

Invest Through Mutual Funds

Investing through funds such as mutual funds serve as another exciting way to invest in stocks. They are particularly great for investors with little or no experience. You can find a mutual fund that invests primarily in stocks.

To do this, you must be able to figure out the objective of that fund (growth or investment) as well as their risk appetite. You can also select funds based on the type of industries they invest in like real-estate funds.

Find a fund with objectives as yours and you would have most of the work done for you – at a cost as well.

Written by Lawretta Egba.