A "share" typically refers to a unit of ownership in a company or corporation. When you own shares of a company, you essentially own a portion of that company. Shares are also known as stocks or equity.
For one to buy shares, he/she must know what they are in the first place right? In lucid terms, shares are part ownerships of a company or a business in measurements called units which you buy for a fixed price or a market price depending on the situation. So, when someone buys shares, it means you buy part ownership of a company in measurements called units for specific value. At this point, you’re probably wondering how to buy shares or where someone can buy shares. Well, shares are traded (bought, sold, exchanged etc.) on a platform called the Stock Market – a market where publicly listed companies or businesses trade their shares daily and either make profit or loss. For a company to be publicly listed, it means that they are entering into the stock market to have their shares open to the public for buying and selling and this happens when they offer something called “IPO” which stands for Initial Public Offerings.
Here are a few key points about shares:
Ownership: When you own shares in a company, you become a shareholder or a stockholder. This ownership entitles you to certain rights, such as voting at shareholder meetings and receiving a portion of the company's profits in the form of dividends.
Stock Market: Shares are often bought and sold on stock exchanges. The value of shares can fluctuate based on various factors, including the company's financial performance, market conditions, and investor sentiment.
Investment: Many people buy shares as an investment. They hope that the value of the shares they own will increase over time, allowing them to sell the shares at a higher price in the future.
Dividends: Some companies distribute a portion of their profits to shareholders in the form of dividends. Dividends represent a share of the company's earnings and are usually paid on a regular basis.
Types of Shares: There are different types of shares, including common shares and preferred shares. Common shares typically come with voting rights and provide a share in the company's profits. Preferred shares may have priority in receiving dividends but might have limited voting rights.
Market Capitalization: The total value of a company's shares is its market capitalization, which is calculated by multiplying the current share price by the total number of outstanding shares. Shares play a significant role in the financial markets and investment landscape, and they offer individuals and institutional investors the opportunity to participate in a company's growth and success.
How can someone buy shares or how can someone trade stock?
For you to buy shares or trade stock, you must have money and most importantly, however the following are the process to buy share:
1. Pick a company to invest in: If you are thinking of how to buy shares in a company, you first must pick the company whose shares you wish to buy. This involves taking time to research about companies that are doing well and leading on the stock market or in their field of operation. For example, if you wanted to invest in the automobile industry, you’d think of how to buy Tesla stock or Toyota or GM etc. because they have made a name for themselves in that field. Knowing where you wish to buy stock gives you a roadmap of where you are going with your investment plan and believe it or not, that is serious business.
2. Get a “Stockbroker”: A stockbroker is someone who acts as a middleman between a company that is publicly listed and an aspiring shareholder (someone who wishes to buy shares of a company on the stock market). A stockbroker must be licensed by the exchange commission of the country where the trading takes place after he has gone through a series of training. He/she basically has the responsibility to help you place an order for the number of units you want, this is known as placing a market order. He must also see to it that the transaction is completed and that you do not invest your money in scams or failing companies that would leave you at a loss. After he successfully helps you place a market order and see through your purchase of the shares in your choice company, he gets paid in a fixed amount or a percentage of the value of total shares you bought, all dependent on the existing agreement between you both if he works independently. It is worthy of note that a stockbroker could either work independently on his own, under a company or in a small team with other stockbrokers and could be paid fixed salaries or in commissions.
How To Buy Stock Online
Getting a stockbroker to handle your efforts at investing in the stock market used to be the only way into the stock market back in the 80’s, 90’s and even early 2000’s but that is no longer the case. The global adoption of the internet and the proliferation of mobile apps on phones has made it easier to keep tabs on the stock market and possible to buy stock online. With the use of specifically tailored apps, one can now invest in stock online, know how to buy stock and become his own broker aided by the guidance of professionals who work for companies that own those apps. You could sit in the comfort of your room and register on these apps which show you how to invest in stock even for beginners and how you can buy shares of your choice and any amount. In Nigeria, two apps lead the way when the question of how to start trading stocks online may arise.
1. Chaka: Chaka.com Chaka is the first company whose mobile app platform was fully licensed in Nigeria by the Securities and Exchange Commission (SEC) and the Central Bank of Nigeria (CBN). They enable users to trade stock of both Nigerian and Global companies based in the US and other European countries. Although they are Nigerian, they have a global outlook. They offer wallet options of the Naira and the dollar, helping you keep track of which investment is global and which is local, so you don’t get things mixed up. Interestingly, these guys make it so easy and cheap that you can invest with as low as 1000 Naira! Yeah, just 1000 naira and you could get into the stock market with the aid of Chaka. They have over time expanded into other African countries and keep improving their services as they go.
2. Bamboo: Investbamboo.com This was the first company to launch a mobile app that enables stock trading in Nigeria. Although, they were temporarily shut down for not obtaining full licensing from the SEC before resuming operations. This has in no way stopped them as a court order enabled them to continue operations while getting a full license is in the works. Bamboo has a more global outlook than Chaka, offering access to stock of major US and European corporations and conglomerates. They even go further to offer Exchange Traded Funds known as ETF’s, professional advice, a glossary of major stock market terms and even grant you access to the investment portfolio list of renowned investors and venture capitalists such as the living legend of investing, in person of Warren Buffett. They have expanded into other African countries and constantly make effort to bolster their stock options as well as communicate with their users via email and Twitter where they even hold Twitter space sessions to teach about the stock market and investing generally.
Post Script for both companies would require you to submit sensitive documents during verification process which are any of the following,
- National Identification Number (NIN)
- International Passport
- Driver’s License
This is to verity your true and full information in line with SEC regulations, so this are the basic requirement they ask on their app.
Summarily, if you have been wondering how to start investing in stock, how to buy stock online without a broker, or even just how to trade in the stock market, it is easy to invest in the stock market for beginners with little money or for professionals with huge sums, be it online or manually through the help of a broker. Just have your money, know where you want to invest, and the rest will be made possible.
Frequently asked question and answer about how to buy share
Sure, here are some frequently asked questions about how to buy shares, along with their answers:
1. How do I buy shares?
Answer: To buy shares, you need to open a brokerage account with a reputable stockbroker. Once your account is set up, you can place orders to buy shares of specific companies through the broker's trading platform.
2. What information do I need to provide to open a brokerage account?
Answer: You'll need to provide personal identification, contact information, and financial details. The broker may also ask for your Social Security Number or Tax Identification Number for regulatory purposes.
3. How do I choose which shares to buy?
Answer: Research companies you're interested in by analyzing their financial performance, industry trends, news, and outlook. You can also consider consulting financial news sources, analyst reports, and conducting fundamental and technical analysis.
4. How do I place an order to buy shares?
Answer: After logging into your brokerage account, you'll use the trading platform to enter the stock symbol of the company you want to invest in, specify the number of shares you want to buy, and choose the type of order (market, limit, stop, etc.).
5. What's the difference between market and limit orders?
Answer: A market order is executed immediately at the current market price, while a limit order specifies the maximum price you're willing to pay (or minimum price you're willing to sell for). A limit order might not be executed if the market doesn't reach your specified price.
6. How do I pay for the shares I want to buy?
Answer: You can fund your brokerage account through electronic funds transfer (EFT), wire transfer, or other accepted payment methods. Once your account is funded, you can use the available balance to buy shares.
7. Do I need a lot of money to start buying shares?
Answer: No, you don't need a lot of money to start buying shares. Some brokers offer fractional shares, allowing you to invest in a portion of a share with a smaller amount of money.
8. How long does it take for my order to be executed?
Answer: The time it takes for your order to be executed depends on the type of order and market conditions. Market orders are usually executed quickly, while limit orders might take longer if the stock price doesn't reach your specified limit.
9. How do I keep track of my investments?
Answer: Your brokerage account will have a portfolio section where you can see the shares you've purchased and their current values. You can also use financial apps and websites to track your investments.
10. Can I sell my shares whenever I want?
Answer: Yes, you can sell your shares whenever you want. Log into your brokerage account, enter the details of the shares you want to sell, and place a sell order. Remember that investing in shares involves risks, and it's important to do your research, consider your financial goals, and potentially consult a financial advisor before making investment decisions.