You want to buy stocks for the first time? Our step-by-step guide with the most important basic rules for buying shares helps investors to get to grips with shares – and to choose the right shares for them. Learn how to go about investing your money directly in stocks.
Buying shares yourself and trading on the stock exchange is easier than ever thanks to online trading: with just a few clicks, a trade is executed, the share is added to your own portfolio. But before you actually buy a stock, there are a few basic rules and tips you should follow to protect yourself from making the wrong decision. Here’s how to proceed step by step if you want to add shares to the securities in your custody account or make your first investment in equities:
1. Open a securities account
The first step for stock trading is to open a securities account: To buy and sell shares, you need a securities account at a bank. This can usually be opened easily online. At PostFinance, for example, just a few clicks directly in e-finance are all it takes for you to start trading equities.
2. Define your investment horizon
More than with other securities, a long-term investment horizon is central for shares. If you can invest for ten or more years, you increase your chances of achieving a higher return thanks to developments on the financial markets and, if applicable, dividends. At the same time, with a long investment horizon, you can also absorb any losses from price falls or stock market corrections. You can also choose the time when you sell your shares more flexibly if you have a long investment period than if you have to sell your shares quickly and at an inopportune time at best.
3. Diversify your portfolio
In finance, diversification refers to the spreading of assets over several investment objects. This means that you spread your money over different markets, sectors, currency areas and stocks. Diversification (or diversification) means increasing choices on the one hand or reducing risks on the other hand. For example, by diversifying, you reduce the likelihood of betting it all on the wrong horse At the same time, you increase the possibility that the performance of the other stocks will pick this up.
You want to know more about diversification? Then read our article "Diversification – why you should not put all your eggs in one basket" .
4. Inform yourself
New technologies and exciting new industries often seem enticing. The most important tip: Don’t invest in anything you don’t know or understand. In particular, investors who do not want to or are not able to take particularly high risks should rather focus on shares of companies with a solid business model and a constant cash flow. Seek expert advice, if necessary, to further educate yourself about a company and its key metrics.
5. Set your target price
Once you have decided on your first stock, think about what price target it should reach: When is the increase in value big enough for you that it is worth selling the share again?? And what is the lower limit at which you would sell the stock – no matter if you make a loss – to protect yourself from a bigger loss. Only then should you fill your portfolio with shares.
6. Place your trade
Once you have chosen your stock, the next step is to buy it. You can do this easily and independently at PostFinance via the "E-Trading" online trading platform. Don’t forget: for every purchase or sale of a security, transaction fees are charged for the execution, settlement and brokerage of stock market transactions. The amount of the brokerage fee (fee for stock exchange transactions) depends on the size of the order as well as on the exchange location. In the video we explain how buying a share works:
For more on the different types of stocks you can invest in, see the article "The different types of stocks".
You want to learn from the great stock market gurus? In the article "Learn to invest with the best tips from famous investors" you will find the best tips from Warren Buffett and Co.