How I Started Buying My First Stock

by David Ning · 29 comments

invest online by yourself
One of the readers recently asked:

I see that you do quite a bit of trading via E*trade and I think it would be pretty cool to have a post about how you went about making your first stock purchase.

Naturally, I agreed to this because I would gladly share my experience with everyone. Let me know if you have any questions by posting a comment below.

As I think back, I’ve always been involved with the stock market unknowingly. As a kid, my parents bought me some mutual funds along with some CDs in an effort to help me understand money. At the time, I didn’t really know what money really was and meant but having the statements come every quarter was pretty exciting because the figure slowly became bigger.

Once I moved to the US a couple of years ago, I was living by myself which meant that I was on my own for many of the things that I took for granted while I was living with my parents. This included everything about money. I had the mutual funds and CDs, and I also have some cash saved up in an ING Direct online savings account.

By then, I’ve heard about online brokerages and stock trading but I was nervous about doing it by myself. However, I realized that most of the mutual funds are really about paying someone else to do what you can do yourself. It also didn’t help reading about the fact that most mutual funds perform worst than the S&P 500. I was thinking to myself “if they could do it, I could”.

With that in mind, I started frequenting financial websites like The Motley Fool and Yahoo Finance and within days, I signed up at ETrade through one of the advertising links there. I didn’t do any research on different brokerages because I told myself that I can always switch if I didn’t like it. Although I believe I was lucky and found that ETrade is one of the best brokerages, I do not recommend signing up for a brokerage account without doing any research. One thing I did though was that I transferred a small portion of my money into the account to limit the chances of me losing lots of money.

I am pretty familiar with how websites work, so signing up was a breeze and I familiarized myself with the account like a little kid with a new toy. I explored so many pages within the website and I was fascinated by all the performance metrics about the account. I didn’t know what most of the terms meant but that was fun because I was determined to learn.

Of course, I was impatient as always so without any research and based only on my personal experience with buying the company’s products, I bought my first stock. 70 shares of Intel (INTC) at $19.81 on March 27, 2006.

Fast forward to today. My brokerage account has become much bigger (as a matter of fact, my brokerage account has more money in it now than my net worth in 2006), my investment knowledge has grown tremendously and I’ve also found something to do that I really enjoy.

If you are thinking about trading stocks for the first time, I urge you to open an account in any of the well known brokerages. Start exploring the brokerage website and also the sites I listed earlier. Learn about how companies make and lose money. Get a feel about why prices go up and down based on supply and demand of that particular stock. DO NOT follow what I did and just blindly buy a stock thinking you would make money because you won’t. I was lucky because I started when the market was generally good but times are different right now.

Have the enthusiasm to start right away, but do enough research and make sure you understand why you are buying a particular stock before you put your money on the line. At the beginning, you will probably lose some money but understand why you lost money and try to adjust. Do that enough times and it could be a very profitable road for you in the future.

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{ 29 comments… read them below or add one }

Calvin June 11, 2008 at 10:24 am

Nice to know your experience and a little history. :)

Did you sell your Intel?

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philip June 11, 2008 at 11:29 am

It is great to see that there was some trepidation involved with getting into it. Time to go check out Motley Fool a little closer as well as sign up somewhere.

Thanks for the post

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Frugal Dad June 11, 2008 at 11:56 am

I can appreciate this story because we had similar beginnings. My first stock play was a little more speculative, and while I got out at just the right time, subsequent investments were all bad. In fact, it chased me away from picking single stocks because I simply don’t have time to do the required homework.

Down the road, I would like to dabble with maybe 10% of my portfolio in single stock picking because I generally enjoy learning about companies and making educated investments.

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MoneyNing June 11, 2008 at 10:35 pm

Calvin: I did sell it but I bought it back so I still own it.

Philip: I’m glad you enjoy the post.. Let me know if you have additional questions.

Frugal Dad: It’s good that you lost money at the beginning because it probably saved you from big downturn moves. With the stock market, better safe than sorry usually works pretty well.

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magnesium June 18, 2008 at 4:00 am

It is great to get know the way you started and your experience. Thanks for sharing us with your story

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Amir Miller June 27, 2008 at 10:28 am

If u have time can u direct me step by step in a 10 step method

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MoneyNing June 29, 2008 at 9:13 pm

Amir: I would really look into the different brokerage accounts. There are a few that you can check out.

tdameritrade.com, etrade.com are all good ones.

You already know which one I like and use and it’s very easy to setup an account with either. Just go to their page and there is a link on the first page. Click that and follow instructions.

Email me if you run into any problems.

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luz July 12, 2008 at 9:53 am

Stock trading is very risky:)

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Michael Pair July 15, 2008 at 6:29 pm

I can remember my first stock purchase. I didn’t know much, but I wanted to learn. Recently, I’ve started a blog to teach people how to invest in the market. My goal is to do so in a very simple way using
plain English.

I hope some find it useful.

Michael Pair
http://investmentsplainandsimple.blogspot.com

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James - Forex Trading Blog July 25, 2008 at 1:36 am

I can remember one of my first share purchases and it was a complete disaster. I invested in Energis (a UK tech company) back in 2001 and the following year it went into administration. I lost around 90% of my money.

It was a great learning experience and I’ve recouped that money many times over, but I have to admit it still sends shivers down my spine every time I think about it.

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MoneyEnergy August 15, 2008 at 11:01 am

I started much earlier than you (in 2001) but with a much smaller amount. I’m more of a conservative stock investor. I like blue-chips with dividends. Although I am drawn to good mining stories:)

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Kat September 22, 2008 at 8:37 am

Wow, This article is inspiring. I have to do my homework so I can do it too.

I’d like to get my own stock but I’m not sure how to go about it with smaller amounts here in my country (Philippines).

When I do it, I’d like to write a step by step article about it so I can help others get over their 1st time nerves.

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Finance November 10, 2008 at 7:30 pm

Yes it is good to do enough research and find a reliable stock broker before investing your money.

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Britanny January 13, 2009 at 7:34 am

It is always interesting to know how someone starts his first stock. Investing in the right stock can bring much profit. I am going to get my own stock but I am a little bit frustrated on how to start having not a big amount with me.

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work from home geek April 12, 2009 at 5:58 am

That’s a great story. What would be the best stocks to get into due to the fall of the economy?

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John Pinion May 29, 2009 at 8:13 am

First of all, I want to convey my regards to that reader who requested you to write about your stock trading. I greatly enjoyed looking through your post and found it very informative. Actually I was totally unaware of the stock or online stock trading. And now I am very eager to invest in stocks. But to make profit in this sector, I need a good broker’s help. Could you please suggest the name of few good stock brokers?

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Vivian Love June 10, 2009 at 4:01 pm

What do you look at to decide where you should buy that stock? Warren Buffet said you should buy stocks when other are fearful. What do you think about this statement? Why? Is it counter intuitive?
thanks

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Love poems & Love Quotes July 4, 2009 at 9:57 am

I heard stories about ETrade. A great place to start when dealing with stocks.

Regards,
Jermaine

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mlgreen8753 September 8, 2009 at 11:52 pm

Interesting story. I purchased my first stock after reading an article on Breast Cancer Investing, which informed me about a company called Mentor Capital that has a 20% claim in a privately held biotech company called Quantum Immunologics (QI) who has FDA approved clinical on the way for a new breast cancer treatment that exposes proteins found only on cancer infected cells. By exposing these proteins, they can direct the immune system to directly attack only infected cells making this treatment safer and less tormenting than other forms of treatment. Because Mentor Capital is the primary funding source of (QI), an investment in the stock of Mentor Capital is supporting the breast cancer research of QI. Recognizing the potential of this innovative new treatment, I decided Mentor Capital stock would be a smart investment.

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stock and investment tips October 2, 2009 at 11:46 am

The above is very good example of growing your wealth by investing in stocks. I always trust stock investment more than keeping your money in fixed deposits or in saving a/c. But i will suggest the beginners to start with mutual fund and then enter in stock market after doing their own research.

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Basics Stock Market March 16, 2010 at 9:13 am

Thanks for sharing your experience. If it wasn’t for internet share trading I’m sure a lot of us would have found it difficult to get started trading.

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on credit June 15, 2010 at 1:11 pm

I also started with Etrade and also tried Tradeking. Both are nice but Tradeking has this benefit that once your IRA account reaches 25k, you can make it into a margin IRA account. In my case it was a bit more stressful because I started by investing the little savings which I had and started living on credit until I started making money from my stocks.

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Michelle November 9, 2010 at 3:54 pm

I recommend learning technical analysis. Even beginning stock market traders can learn simple technical analysis to help them make the right decision.

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dott May 26, 2012 at 8:45 pm

Really? Did you just go all “parenty” on us, and say “Do as I say, NOT as I do (did)” ???? Come on, Dad!! How are we ever going to learn our own lessons!!

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Kevin Ashwe July 20, 2012 at 8:47 am

For me it was my dad who bought my first stock. I didn’t even value it since I didn’t really know much about it. It wasn’t until I found myself in a financial struggle and the only thing that could bail me out was the stock, that I began paying attention to stocks and the stock market.

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Shares Coach September 6, 2012 at 2:10 am

I bought my first stock when I was 18 years old and had no idea about supply/demand, stock markets, etc. but I wanted to own shares. It was another 11 years before I learned more about shares, opened a broker account and started to build a portfolio.

Now I coach others how to get started, sell information products to help people get started, write a blog http://www.HowToInvestInShares.co.uk and have published a book on Amazon by the same name.

Now – with savings accounts earning peanuts, fund managers getting greedier by the day, banks and governments going bust, etc. I’m glad I started investing in solid businesses via company shares.

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Paulyne March 19, 2013 at 9:08 am

Thanks for the post it was quite interesting in hearing your story on how you first started however, besides research on the brokerage sites what should i know more about when thinking about buying stocks? How much money is a safe amount in buying stocks?
This is completley new to me and i am extremely interested! :)

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paul June 27, 2013 at 8:07 pm

Which type of bank account should I have to start trading and how much minimum amount should be there as I should not loose big money because I don’t have much. Can you give the list of good brokers from which I can get the best with lower fees?

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Nancy Keel October 27, 2014 at 7:34 pm

Well, I have read many of the reviews and I am still just kinda confused about how to get started. First of all, is it safe to start with $200.oo or maybe $5oo.00 to begin with. I want to buy a share of a company, but confused about that too. I know I probably should open myself an account with ETrade or something similar. Can someone tell me exactly how to start with the little money I am willing to start with? Should I start with more money?

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