February 6, 2012 | In: Tutorial
How Can I Buy Apple Stock?
Now that Apple is the most valuable company in the world, there are many people who are not investors that want to invest in Apple. I know that for a fact because I receive many questions nowadays on this website with the same title over and over again: “How can I buy Apple stock?”
Now my first answer to those who ask me this question is the following: “You can’t buy Apple stock, you buy Apple shares. There is a difference between a stock and a share. A share is a portion in the company, a stock is an index on how much each share is worth”.
Now once I’ve clarified the difference between a stock and a share, and that what you really buy is Apple shares, and not Apple stock, I move on to explaining the whole process of buying Apple shares:
Step 1: Open an investor account
If you search on Google for the following term “trade stocks online”, you will find many, many companies offering this option. These companies will allow you to create an investor’s account (also known as a trader’s account) with them, and they will also let you connect your bank account to your investor’s account, so you can transfer money from your bank account to your investor’s account and vice versa. It’s important to go with a brokerage firm that is very trustworthy and that has a good brokerage history and that won’t charge you an arm and a leg for every trade that you make. Additionally, it’s important to deal with a brokerage firm that has a 1-800 number that you can call whenever you want assistance (you will need assistance if you’re a first time trader, trust me on this one).
Another way for opening an investor/trader account is just going to your bank and opening the account there. Banks are usually very, very happy for doing this for you because they will make a lot of money from you if you’re a frequent trader. Just call your bank or go to the nearest branch and ask for opening an account that you can use to trade stocks. You may be required to sign several documents (basically saying that you’re adhering to the terms, that you’re understanding the risks associated with trading stocks, that you will never ever blame the bank for your losses, etc…)
Now once you open an investor account, you will be given the following information:
- The URL of the trading platform
- Your username or account number
- Your password
Step 2 – Transfer money to your investor’s account
Before doing anything, you will need to transfer money to you investor’s account, you can usually do this online by logging in to your bank account and moving money from any account that you have with your bank to your investor’s account. This process should be fairly simple and if you have any problem you should contact your bank (and not your broker) for help with this step. Keep in mind, however, that the money transfer might not be immediate (it might take a few days), especially if your broker is not your bank or is not an entity associated with your bank.
Step 3 – Login to your investor’s account
Using the credentials given to you in Step Number 1, you will be able to login to your trading platform. Note that when you login for the first time, you might be asked additional security questions or you might need to call a number to activate your account.
Step 4 – Accept all the terms
When you sign in for your investor’s account for the first time, you will be asked to digitally sign several documents – as far as I recall there will be one for the NYSE, one for the NASDAQ, one for the SEC, and one for the TSX (in case you’re trading Canadian stocks). This process might take you about 15 minutes to finish.
Step 5 – Start trading
After you accept all the terms, you are now are ready to buy shares of any company, not just Apple! But, you only want to buy Apple. But before you do that, try to accustom yourself with the trading platform. See what you can do – and don’t be scared of exploring, everything requires a confirmation!
Now that you’re accustomed to the web interface of your broker’s trading platform, you can execute your first trade. Just click on Trading, and then click on Equities (stocks are called equities). You will see a form where you will have to enter the symbol of the stock, for Apple you should choose AAPL (as soon as you enter the symbol the bid and ask price will appear), you will also have to enter the number of shares that you want to buy (you should choose an integer, the moment you type in a number the total cost of the trade will be displayed), and then you will have to choose buy next to order type (since you are buying AAPL). The form may also contain a field where you have to enter your phone number, and you will always have to enter your password (that you used to login to this website) to execute a trade.
Once all the information is filled, you will be able to see how much money (approximately – the price might change between the filling of the form and the filling of the order) including the commission you will have to pay for these Apple shares. Now click on submit. The moment you click on submit, your order will be executed and it’s pending to be filled. Since AAPL is a very, very liquid stock, your order will be filled almost immediately, provided you have enough money in your investor’s account to cover for the total cost of the trade. You can check if your order is filled by clicking on “Orders” or “Transactions” on the top menu (please note that the interface may substantially change from one broker to another). When you see that your order is filled, you can proudly say in front of your friends/family/significant other that you are now an investor in Apple.
Step 6 – Do nothing or buy extra shares
If you’re in it for the long term, then you don’t have to do anything anymore. You bought the shares and Apple’s fortune will be one with yours! The next thing to do would probably be buying more AAPL shares!
Now, if at one point you feel that you have some unmanageable debt, then you can sell your AAPL shares to settle that debt, instead of accruing interest.
How much time will the whole process of buying Apple shares for the first time take?
Normally, the process takes about 2 weeks, but I know of investors (including myself) who started trading 2 days after starting the process above. (I personally opened an investor’s account with the bank).
Some things to remember/caveats
- The stock market is only open from 9:30 AM to 4:00 PM every weekday. The market is closed on weekends and holidays (but there are some ways to buy shares on weekends).
- Be sure to choose the right stock symbol when filling in the form, you don’t want to be stuck with a stock that you didn’t mean to purchase.
- Don’t wait a long time between filling in the form and submitting the form. If you do you might buy the stock at a completely different price.
- You will rarely, if ever, buy the stock at an absolute bottom and sell it at an absolute top – don’t be greedy!
- Apple is a very solid company, but it is currently facing competition from other manufacturers in the smartphone and the tablet area – keep an eye on Apple’s performance at all times.
- Capital gains are taxable (when you sell shares and you make money out of the proceedings), but the taxation is different when it comes to capital gains. Here’s an article explaining how much taxes you should pay on your capital gains.
- The stock market is an up and down game. Don’t let fear and greed control you.
- As a shareholder in Apple, you will start receiving documents from Apple (the company), such as financial statements and board changes.
I have tried my best to explain from A to Z the process of buying Apple shares for those who have no previous trading experience whatsoever. I really hope this article will help someone, somewhere!
This article (as well as all other articles on this website) is an intellectual property and copyright of Fadi El-Eter and can only appear on fadi.el-eter.com.