Are you wondering how to buy Amazon shares? Amazon is one of the most popular retailers in America and it’s not surprising that many people want to invest their money into this company. If you’re considering buying Amazon shares, keep reading for tips on how to make the process as easy as possible.
If you’re interested in buying Amazon shares, it can be done entirely online. While you may already be thinking of investing in Amazon stock, this article does not advise you to invest in Amazon stock. We will share how you can buy stock in companies, with Amazon as an example. Investing in Amazon is an investment decision for which you might want to consult your investment advisor. This is not investment advice by any means.
Overview of Amazon
Amazon is an American multinational technology company founded by Jeff Bezos in 1994. It’s one of the largest internet companies on Earth and operates a wide variety of businesses, including retail (online shopping of many different types), digital content production, television programming, cloud computing services and other areas like e-book publishing. Amazon went public in 1997 and Amazon shares have done well over the past few years because the company has been growing at an amazing pace.
Amazon is one of the influencers of the tech industry, and they are responsible for a huge American jobs growth. Amazon has created more permanent full time positions than any other company in recent times. However, the company’s rapid growth has also brought criticism for its treatment of its workforce and its policies.
Amazon’s stock is traded on the NASDAQ with the ticker AMZN and the company currently has a market cap of over $1.74 trillion.
If you’re thinking of investing in Amazon, you should look at the stock’s recent performance and its potential for future growth. You should also look at future product announcements and other impacts on the markets Amazon operates in to analyze if any announcement could impact Amazon’s stock adversely.
Amazon’s stock performance in recent years
Amazon’s stock has been one of the world’s top performers in the past five years. In June 2016, AMZN stock was trading at $725, and the current price as of June 2021 is $3449. The company has seen its stock grow by over 375% in five years. The pandemic has been a boon for Amazon, as consumers choose to shop online instead of going out.
This comes at the expense of brick and mortar retailers like Macy’s, JCPenney, Kohl’s which has led to store closings across America in recent years.
Buying, selling, and trading Amazon shares
Here are the differences between buying, selling, and trading Amazon shares.
Buying Amazon shares: Buying Amazon shares involves finding a broker and placing an order to buy Amazon shares. You would want to buy at a lower price to profit if the stock price goes up.
Selling Amazon shares: If you already hold Amazon stock, you can sell it for a profit if you’d like to. If Amazon’s stock price has increased significantly since you purchased it and if the market conditions look favorable for selling, that is, if you expect the price to drop, you can sell the shares and make a profit. Selling involves finding a broker and placing an order to sell Amazon shares.
Trading Amazon shares: Trading Amazon stock is the same as buying and selling Amazon shares, but it is done over shorter periods. With trading, the goal is to make smaller profits quickly. You also run the risk of making losses rapidly as well. If you’re a new investor, we recommend buying and holding your investments in Amazon for a longer period, i.e., six months to a year or more.
Steps to follow before buying Amazon shares
1. Understand how the stock market works
If you want to invest in Amazon stock, you should understand how the stock market works. You should not panic when stocks go down or buy in a frenzy when stocks trade high.
2. Research Amazon stock
As an investor, it is a good idea to buy stocks in companies that you’re already familiar with and know well. If you are already using a Amazon’s products and trust the Amazon brand, you can buy the shares of Amazon. Before you buy Amazon shares, you should take steps to research the stock and its fundamentals.
You should look at where Amazon gets its revenue from, how its growth looks like, and what its plans are. Most of this information will be available in Amazon’s annual report in the annual letter to shareholders. This letter will share the important updates in the business. The SEC filings of Amazon, conference call transcripts of Amazon, quarterly earnings updates of Amazon, and recent news related to Amazon are good sources of information to analyze the company.
The more analysis you do and the more information you have, you will make more intelligent decisions about investing in Amazon.
3. Examine broader market conditions
You should also look at broader market conditions before you buy Amazon shares. If it is a bull market, the price will go up, and it would make sense to buy Amazon stock immediately. If it is a bear market, the price will go down, and it might be better to wait to buy Amazon stock at a lower price.
How to buy Amazon shares – a step by step guide
Buying Amazon shares is a simple process, even for new investors. If you’re thinking of buying Amazon stock, you must decide whether you want to buy Amazon stock for the short term or the long term. If you’re going to invest in Amazon shares for the short term, you should perform a technical analysis of Amazon stock.
If you want to hold Amazon stock for the longer term, you should perform a fundamental analysis of Amazon. You should also keep yourself updated with news and with developments of Amazon. Here are the steps you need to follow.
1. Select a broker
To buy Amazon shares online, you will need to use an online brokerage platform. You will need to choose a broker that gives you access to NASDAQ, as Amazon is listed here. In general, you should look at the following parameters before selecting a stockbroker.
- Stocks available for trading: The first criteria for selecting the broker is that you should be able to use the broker to trade the stocks you’re interested in.
- Commissions charged: Some brokers charge a higher commission, so if you want to maximize your profits, you would want to choose a broker with lower commissions.
- Account fees: You should also watch out for other fees such as annual fees, inactivity fees, trading platform subscription fees, and fees for research or data. Brokers will also charge a fee for transferring cash or investments or for closing your account. You can avoid many of the fees by choosing a broker that doesn’t charge fees or by opting out of services that cost extra.
- Payment methods: Some brokers are more flexible in their payment methods than others. If you want flexibility in payments, this should be one of your criteria.
- Track record: You should choose a broker based on their track record. The broker that you choose should have a track record of reliability, and they should have been around for a while and have good reviews online.
Our broker reviews can help you select from the best brokers for stock trading. Here are the best stock brokers of 2021.
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2. Open a brokerage account
This is the account in which your Amazon shares will be stored. Opening a brokerage account has become very simple. The steps vary from platform to platform, but you should be good to create your account once you provide your details and some form of identification. Again, the time taken to open an account varies between platforms.
3. Fund your brokerage account
The next step is to log in to your account and deposit money in your brokerage account. Most brokers accept bank and debit card transfers, and some accept transfers through other methods such as Paypal.
4. Decide how many Amazon shares you want to buy
If you’re a new investor, you could start small with a small amount and gradually increase your investment as you get more experienced in the stock market. You can also think about investing in fractional shares, which certain brokers offer. Buying a fractional share means you are purchasing a portion of Amazon stock instead of whole Amazon shares. If the Amazon share is too pricey, you can opt to buy a fractional share of Amazon.
5. Choose your stock order type
All you have to do now is search for the AMZN ticker, specify the number of Amazon shares, choose your order type and click on buy. Once you place your order, your broker will execute the order, and the Amazon shares will be listed in your account.
There are different order types you can place. Let’s look at the most commonly used ones, the market order and the limit order.
The market order instructs your broker to place an order to purchase Amazon stock at the prevailing market price. There are no price parameter restrictions on this order. You should use this order type for stocks that don’t experience wide price swings, generally larger company stocks. Stock prices can vary between seconds.
If a slight price fluctuation does not matter to you, you should place a market order. If you place a market order trade “after hours,” when the markets have closed for the day, your trade will get executed the next day at the prevailing market price.
The limit order instructs your broker to place an order when the Amazon stock reaches a specific price point. It gives you control over the price at which your trade is executed. For example, if a stock is trading at $200, but you value Amazon at $180, the limit order tells your broker to wait till Amazon stock reaches $180. Limit orders are suitable for smaller company stocks that experience wide price swings.
6. Review your position periodically
Once you have purchased Amazon shares, you should monitor the stock according to your investment strategy. You should follow the company’s quarterly and annual results and the news and developments in the company.
Investing always comes with certain risks and Amazon is no different. You can reduce risks by diversifying your portfolio and by avoiding scams by choosing a reliable broker. To recap, you can buy Amazon shares by selecting a broker, opening a brokerage account, depositing money in your brokerage account, placing an order, and reviewing your position periodically.