How do you buy stock?

Buying stock can be difficult if you don't know what you are doing and if you don't have a stock broker or an investment advisor. While mutual funds with stock shares continue to be one of the best ways to buy stock, you may be better off to buy stock individually. Here are some tips to help you buy stock:

Tip # 1 - Use a direct stock purchase plan
Many of the large companies offer direct stock purchase plans. Using a direct stock purchase plan, you can buy shares of stock right from the company. In order to purchase stock directly from the company, you need to set up an auto-withdraw from your bank account and you must pay an initial deposit. The company will purchase stock for you by using your bank account to purchase the shares. It's pretty easy to do and it's a great way to make money and to gain experience in the stock market.

Tip # 2 - Check into a dividend reinvestment plan (DRIP)
Another great way to purchase stock is to find out if the company offers a DRIP plan. Similar to the direct stock purchase plan, you will be able to purchase individual stocks from the company and you will also have cash investment options. This allows you to add additional amounts at any time by mailing a check and you can purchase extra stock. DRIPs area great way to quickly build your portfolio and it's nice to have extra control over the amount you are investing.

Tip # 3 - Use a service
Several online sites have popped up and they allow individuals to purchase stock. These web sites are not for everyone, especially since a lot of investors don't know what they are doing, but they are a great way to gain experience in the stock market. You can purchase single shares of stock and start building a large portfolio without needing to work with a stock broker.

When you are dealing with stocks, you must remember that they are volatile and you may not always get great returns from them. A lot of people like to buy their own stocks as they feel that they have more control over their money. Penny stocks are often purchased by individuals and if you play your cards right, you will be able to make a lot of money with them.

• When purchasing stock, you always need to read up on the company. You need to learn as much as you possibly can about the stock so you can try and limit your risk. As you are learning about the company, take a look at how the stock has been performing over the previous months. Some other things to look out for with the company include their managers, their previous financial performance, and their future investment plans.


• Look into purchasing large quantities of stock for low prices. Up and coming companies often sell penny stocks for a low cost and you can get a great deal only to sell the stock in a few years for a great return.


• Watch the stock market closely. A lot of people panic when it starts to drop and they dump their stocks. This is a great time to scoop up some penny stocks for a low cost. When the market turns upwards again, you can sell the stocks and make a great profit.


• Don't bank all your money on the performance of penny stocks. Spread out your money so if the penny stocks fail, you have something extra to fall back on. Diversification is the best way to withstand the ups and downs that come with the stock market.