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- You can buy shares on Amazon by opening an account with an online brokerage or investment platform.
- Before making a purchase, it is wise to evaluate Amazon’s financial data and relevant industry news.
- After purchasing, you will need to strategize and monitor your portfolio regularly.
Amazon entered the scene in 1994 after former CEO Jeff Bezos decided to create an online marketplace for books. Fast forward to 2022 and Amazon, as we know, is much more than that. In fact, the company generated revenues of over $469.8 billion in 2022, returning more than 76% for investors in 2020.
If you prefer to avoid working with a financial advisor, you can buy Amazon shares on your own by opening a self-directed account with Online investment platform or stock trading app. Here are steps on how to do that.
1. Create a brokerage account
The fastest and easiest way to buy for individuals Amazon stock is to open a brokerage account, according to Kavan Chuxie, investor, founder, and business and wealth management advisor at KC Consulting.
Distinguished investment applications from within
If you’re investing in Amazon stock for the first time, he says, you should Choose a broker Which best suits your investment style, consider the features you want your account to include, and compare fee structures between different brokers to determine what best meets your needs.
Brokerage accounts not only expose you to a variety of stocks, but also allow you to invest in other types of assets, including ETFsAnd the investment fundsOptions, bonds, and more. And while not all brokers are allowed to forgo trading fees, the best platforms offer things like commission-free trading (for example, you won’t have to pay a commission every time you trade investments like stocks, ETFs, and options), account types, investment and stocks Partial and flexible customer support.
“Purchasing Amazon stock directly has become much easier and more accessible to retail investors since the 20-for-1 stock split in early June 2022,” Chuxie says. “Immediately after the split was implemented, Amazon shares were trading at $125 a share, and have since fallen to about $115 a share in recent days.”
This is the case with many other technology stocks, he adds, and it provides an opportunity for traders to buy Amazon shares outright at an affordable price.
Additionally, you will encounter multiple account types when looking at brokerage offers. Single brokerage accounts are usually the best move if you are looking to trade on your own. If you want to trade with a partner, then a joint brokerage account will be right for you. However, not all trading platforms (eg, RobinhoodPresentation of joint accounts.
If you are a long-term focused trader looking for less volatile investments, or if you are about to retire, you should exercise caution when investing in Amazon. The stock has proven to be particularly volatile, so it may not be a smart choice for risk-averse traders.
“At the end of the day, I also recommend that investors consider meeting with a qualified wealth advisor — someone who can help assess your individual financial situation and chart a path forward to help you achieve your goals,” Choxey says.
2. Search Amazon’s financial statements
One of the best ways to build confidence in your decision to buy (or sell) stock is to do thorough research on things like the company’s historical performance, earnings reports, balance sheets, and financial statements. Another good step for developing market knowledge is keeping up to date with all the news related to the industry of those stocks, as well as other industries and assets, according to Chuxie.
“Publicly traded companies will get earnings calls every three months informing investors of the current health of their business,” Chuxie says. “Be sure to keep an eye out for analyst upgrades and rating downgrades a few days before the company’s scheduled earnings call, as these tend to set the tone for how investors are expected to react.”
Another thing to keep in mind is that Amazon is not just an online shopping site. The e-commerce and technology giant owns many other business services — including subscription services, web services, and advertising — that ultimately help it generate billions of dollars in revenue.
Therefore, it is a good idea to consider the state of all of its businesses when making a buy or sell decision. In addition, it is also useful to be aware of economic conditions, because these – along with investor demand – also greatly influence whether a stock goes up or down in value.
Choksi adds that the search does not end after you start investing. “It is important to read and study current market news and trends to see how they may affect your investments.”
3. Determine the investment amount and place an order
Now that you’ve decided that Amazon stock is right for you, you’ll need to decide how much to invest in it initially (and later you’ll need to think about how often you want to buy more shares). But the initial investment amount varies for each trader. Just You are You can determine the amount that best suits your financial situation, and you’ll need to make sure it aligns with your risk tolerance, time horizon, personal budget, and investment goals.
But before setting an amount and applying, experts recommend an emergency fund (a provident fund with three to six months of living expenses). This will help prevent financial hardship if your stocks succumb to a temporary downturn in the market.
The next step is to select the type of order and submit the application. Order types basically give you the authority over the price at which the online broker executes your trades. There are generally four types:
- market orderThese orders are the simplest stock market orders. Once you select this type, your order is executed instantly, and you have no control over the price at which it is executed. For example, depending on the performance of the stock, you can pay a price slightly higher or lower than what you bargained for at the time the order is executed. In other words, it is wise to exercise caution when using market orders in fast-moving markets if you have a specific stock price in mind.
- limited demandLimit orders give you better control over the order execution price. It allows you to set a minimum price for your stock, which means that the exchange will only execute the order at or better than the price you set. The exchange will not fill the application if it cannot meet these conditions.
- stop orderStop orders, or stop-loss orders, allow you to set a stop price for the stock(s) you are buying. In other words, you can enter a specific price at which you would like the broker to execute the order. As soon as the stock reaches this value, the order turns into a market order, and the broker immediately executes it.
- Stop-Limit commandStop-Limit orders also allow you to set a stop price for the value of your stock. However, the difference between these orders and stop orders is that your order will become a limit order once it reaches your stop price. It will be executed at this price or better.
Although you can’t control the market or its price fluctuations, you actually have a say in the price you pay for the shares. This can help you invest in stocks like Amazon while keeping a good handle on your budget and personal finances.
4. Review your purchases and monitor your investment
After you buy your stock, you’ll need to devise a strategy to maximize your returns. And you can do this without watching the hourly Amazon stock chart (unless you are a day trader). There are two strategies you can use to get started. It includes (but is not limited to) the following:
- Buy and keepWith this investment approach, you simply buy a total of Amazon shares and hold those shares until you are ready to withdraw the funds.
- Average dollar costThis investment strategy is a better option for traders who want to contribute regularly to Amazon. Dollar cost averaging is a tactic you can use to determine how much you will periodically invest in stocks. As mentioned earlier, any amount you contribute (for example, $10, $20, $50, $100, or more) depends on your personal preferences.
The above strategies can help you generate returns, but neither of them is immune to price volatility and market volatility. Choksi adds that you should not be anxious or afraid of sudden price movements in the short term. “It’s normal, especially in this environment,” he says.
However, if you ever need to sell, you can usually either enter a dollar amount or the number of shares on your broker’s website. Note, however, that Capital Gains Taxes It applies to the investments you sold.
If you’re interested in buying Amazon for the first time, but don’t want to use a financial advisor or investment firm, you’ll need to create a brokerage account to access their stock. Plus, your options for Amazon exposure aren’t just limited to stock. If you’re more risk averse, you can also invest in funds – such as the Vanguard Total Stock Index Fund Admiral Shares (VTSAX) and the SPDR S&P 500 ETF Trust (SPY) – that contain the company.
But no matter what type of investment you choose, you’ll ultimately want to research Amazon’s financial and performance data to see if the company aligns with your investment preferences. It is wise to keep an emergency fund and a solid budget before and after purchase.