How to buy Microsoft stocks

It seems Microsoft is everywhere these days, and it’s more than just office productivity software in this Washington-based tech company. In addition to its Windows products and Xbox games, Microsoft is the name behind the Skype communications app and social media site LinkedIn, among others.

Although Microsoft is no longer the hyper-growth company it once was, it still increased its sales by 27% from 2014 to 2018, and it generated more than $ 16 billion in profits over the course of the year. his last exercise.

Here’s how to buy Microsoft stock and what to consider before you buy.

1. Analyze Microsoft and its finances

Analyzing a company’s competitive position and financials is probably the hardest part of buying stocks, but it’s also the most important. The best place to start is the company’s Form 10-K, which is the annual report that all publicly traded companies must file with the SEC.

The 10-K can help you understand a lot about the company:

• how does it make money and how much
• its assets and liabilities
• the evolution of its profitability over time
• the competitive landscape
• the various risks incurred by the company
• the management team and how they are incentivized

The annual report is a great first step in finding out about the business, but you’ll want to do more than that. For example, you will want to study what other companies are doing to be competitive. It is important to have a broader perspective on the industry.

For example, Microsoft competes with some of the biggest names in the world. Its Bing search engine competes with Google and Facebook, and the company also competes with Cisco Systems, Apple, and Slack, among others in the market for enterprise software and services. With its hands in so many companies, Microsoft has rivals big and small in many sub-sectors.

2. Does Microsoft have meaning in your portfolio?

As one of the largest companies in the world, Microsoft has the kind of financial and market dominance that most businesses can only dream of. It generates billions in profits every year and is truly blue chip stock. Its strong position in many markets and strong balance sheet make it a choice for almost all investors. Additionally, Microsoft is paying a dividend, making it a likely candidate for investors looking for a regular cash payout.

So you’ll want to consider the following questions:

• Does a growing business meet your needs?
• Will you be able to continue to analyze the business as it grows?
• Given the stock’s volatility, will you be able to hold out if it falls or even buy more?

If you are buying just a little bit of Microsoft as a starting position or to get a bit of skin in the game, these considerations may not matter as much as when you take a full position.

3. How much can you afford to invest?

How much you can afford to invest has less to do with Microsoft than with your personal financial situation. Stocks can be volatile. So, to give your investment time, you will probably want to be able to leave the money in the stock for at least three to five years. This means that you should be able to live without money for at least that time.

It is important to make a commitment to hold the stock for three to five years. You wouldn’t like to have to sell the stock when it is near a low only to see it bounce much higher after exiting the position. By sticking to a long term plan, you will be able to weather the ups and downs of the stock.

If you are investing in individual stocks, you will want to keep the percentage of each position between three and five percent. This way you are not heavily exposed to an investment that breaks your portfolio. If the stock has higher trading risk, you can choose a percentage even lower than that range.

Also, rather than just committing a one-time sum of money to the action, think about how you can add more money to your position over time.

4. Open a brokerage account

While opening a brokerage account might seem like a difficult step, it’s actually quite easy and you can set it all up in about 15 minutes.

You’ll want to select a broker that meets your needs. Do you negotiate often or rarely? Do you need a high level of service or research? Is cost the most important factor to you? If you buy a few stocks but invest primarily in funds, a number of brokers specialize in offering commission-free transactions for those funds.

Here is the list of the best brokers for beginners from Bankrate.

After you open your account, you’ll want to fund it with enough money to buy Microsoft stock. But you can take this step completely online, and it’s simple.

[BROKER REVIEWS: Charles Schwab | Fidelity | Robinhood | Vanguard | More]

5. Buy Microsoft shares

Once you’ve decided to buy Microsoft stocks and opened and funded your brokerage account, you can set up your order. Use the company’s ticker symbol – MSFT – when entering your order.

Most brokers have a “trade ticket” at the bottom of every page, so you can enter your order. On the broker’s order form, you will enter the symbol and the number of shares you can afford. Then you enter the type of order: market or limit. A market order will buy the stock regardless of the current price, while a limit order will only execute if the stock hits the price you specify.

If you’re only buying a few stocks – and Microsoft has fluctuated from $ 94 to $ 134 over the past year – then stick with a market order. Even if you pay a little more now for a market order, it won’t affect performance much in the long run, if the stock continues to perform well.

At the end of the line

Buying a stock can be exciting, but success won’t happen overnight. Investors should take a long-term perspective on their investments, and they should consider taking advantage of the average dollar costs, if they believe in the long-term stock.

With the costs averaging in dollars, investors add a fixed amount of money to their position over time, which is really helpful when a stock goes down, allowing them to buy more stocks. Top-flight stocks can go down from time to time, so the strategy can help you get a lower buy price and higher overall profits.

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Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past performance of investment products is not a guarantee of future price appreciation.