How to buy Microsoft stocks (MSFT) – Forbes Advisor
Editorial Note: We earn a commission on partner links on Forbes Advisor. Commissions do not affect the opinions or ratings of our editors.
Since Bill Gates and Paul Allen founded Microsoft in 1975, it has grown into one of the world’s largest tech companies, producing everything from computers and software to gaming systems and cloud computing support for the world. space exploration.
All of this growth means robust incomes. In quarterly results released in October 2021, Microsoft’s revenue was $ 45.3 billion, an increase of 22 percent from the same period last fiscal year. And its share price has risen more than 45% since the start of the year.
If you want to add some of this awesome financial data to your portfolio, here’s what you need to know about buying Microsoft stocks.
How to buy Microsoft Stock (MSFT)
1. Choose a brokerage
To buy MSFT you will need an account with an online brokerage or investing app. Account fees and minimums vary depending on the platform you use, so be sure to research them before signing up. Check out our picks of the best online brokers and best investing apps to help you with your research.
SoFi automated investment
SoFi automated investment
2. Set investment goals
Once you’ve selected a brokerage or investing app, think about your investment goals. Deciding on your goals will determine the type of account you need:
- Retirement. If you want to invest for your golden years, an Individual Retirement Account (IRA) is probably your best bet because of its powerful tax advantages. You will need to choose between a Traditional IRA and a Roth IRA, each offering unique benefits, depending on your financial situation.
- Tuition and study fees. If you want to save for a loved one’s tuition and other education expenses, a 529 plan lets you invest money to cover some or all of those costs with tax-efficient dollars.
- Create wealth. If you are just looking to build your wealth, opt for a regular taxable investment account. You will not receive tax relief, but neither will you be limited in when or under the circumstances under which you can withdraw your money.
3. Decide how much you want to invest
Unless you have a net worth like Bill Gates, you’re probably not ready to buy a huge stake in Microsoft, despite the firm’s strong performance lately. When determining how much to put in inventory, ask yourself the following questions:
- What is your budget ? You don’t want to invest in stocks that you will need to cover your immediate expenses. But once you’ve put them aside and set aside some for an emergency fund and retirement savings, you’re free to invest whatever is left.
- What is Microsoft’s current price? Microsoft is not cheap; in December 2021, its share price exceeded $ 300 and has exceeded $ 250 per share since June 2021. While some brokerage firms allow you to buy fractional shares, others require you to buy shares in their entirety, which means it would cost you hundreds just to get a single share.
- Are you comfortable with investing and risk? When you invest in a single stock, even in well-known companies like Microsoft, you are taking more risk than if you were investing in a diversified fund. You will experience every high (and low) that MSFT goes through, and you could lose a substantial amount of money quickly. If this makes you nervous, you might be better off with index funds and exchange traded funds (ETFs).
- How does Microsoft fit into your existing investment strategy? “Microsoft can play the role of a core or a core holding company in many different portfolios,” says Matt Weber, Chartered Financial Analyst (CFA) at UMB Bank. “The stock is unique because it has attributes that are attractive to growth, value and income oriented investors.” You’ll want to find out how Microsoft could work in your portfolio and complement your existing investments.
- How often do you plan to buy MSFT? Rather than investing thousands of dollars at a time, you can use the average dollar cost to buy small amounts from Microsoft at regular intervals, spreading out the expenses, reducing the likelihood of you going when the price is high and potentially lowering the average cost you pay per action.
4. Do your homework on Microsoft
Before you invest any money in a business, it pays to do your research. The United States Securities and Exchange Commission (SEC) requires publicly traded companies like Microsoft to file information about their finances and performance on a quarterly and annual basis. You can find Form 10-Q (quarterly reports) or Form 10-K (annual reports) on the corporate investor relations site.
You can also use tools like The morning star or Forbes for insight and market analysis from industry experts.
5. Determine your order type and place your order.
Once you are ready to place your order, log into your trading or investing platform and enter Microsoft’s ticker symbol (MSFT) along with the number of shares or dollar amount you wish to purchase. You can choose to buy Microsoft shares at their current price (called a market order) or you can place a stop-to-buy order once it hits a certain price.
Microsoft is listed on Nasdaq, the second largest stock exchange in the world. Normal Nasdaq trading hours are 9:30 a.m. to 4 p.m. ET Monday through Friday, although your brokerage may give you access to extended trading hours before and after the market.
6. Evaluate Microsoft’s performance
No matter what you invest in, it is always wise to periodically review the performance of your investment and see how it measures up. You’ll want to start by determining MSFT’s returns for a given time period so that you can compare them to those of specific market benchmarks, such as the S&P 500 or the Nasdaq 100 Index.
This will give you an idea of how the performance of your investment compares to the performance of particular industries or the overall stock market. You can also track his financial data on each quarter or year to decide if he is using his financial resources wisely.
How to Sell Microsoft Stock
If you want to sell your Microsoft stocks, log into your brokerage’s trading platform or investment app and enter the ticker symbol and the number of stocks or dollar amount you want. to sell.
Before you sell stocks, however, be sure to consider capital gains taxes. If the stock price has risen since you invested your money, you will be taxed on your profits, unless you invest in a tax-advantaged account. If you want to minimize the amount you may owe, consult a tax professional.
Other ways to invest in Microsoft
If you want to invest in MSFT but want to minimize your risk, you can turn to index funds or ETFs that hold it. It’s not hard to find funds that do: Based on its market capitalization, Microsoft typically represents 6% of S&P 500 funds and 10% of Nasdaq 100 funds.
These funds present a great opportunity for most people to gain exposure to Microsoft’s historic growth.
“From a portfolio management perspective, your portfolio should be large enough to buy individual stocks while maintaining adequate diversification,” Weber explains. If you don’t have the money (or the time) to manage a sufficiently diversified portfolio on your own, ETFs and index funds offer a great alternative.