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.
- E*Trade Financial - Official Site
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Nice to know your experience and a little history!
Did you sell your Intel?
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
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.
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.
It is great to get know the way you started and your experience. Thanks for sharing us with your story
If u have time can u direct me step by step in a 10 step method
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.
Stock trading is very risky:)
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
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.
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:)
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.
Yes it is good to do enough research and find a reliable stock broker before investing your money.
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.
That’s a great story. What would be the best stocks to get into due to the fall of the economy?
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?
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