Amazon is one of the most well-known multinational companies. In 2018, the New York Times announced that Amazon had become the second American company to cross the trillion-dollar threshold. After working for several firms on Wall Street, Amazon’s founder, Jeff Bezos, started the company in 1994. Since then, it has become one of the world’s most successful online retailers. As such, their stock has been a reliable performer for investors of all calibers.
If you’re interested in investing in Amazon yourself, here you’ll find the best strategy for doing so. Below, you’ll learn about the research you should conduct prior to investing in Amazon, as well as the steps you should take to ensure investing in Amazon fits into your overall investment strategy.
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2. Research Amazon Stock
Just because a company is well known doesn’t mean it’s going to do well on the stock market. While Amazon is a ubiquitous company in the public eye, it’s still important to do your own research to determine if investing in the company is a viable choice for your overall investment strategy.
Because Amazon stocks are publicly traded on the New York Stock Exchange (NYSE), you can check into Amazon’s stock performance daily. Be mindful of the company’s revenue, past stock performance, and their current place in the market. This information will allow you to make smart, strategic investment decisions. An understanding of how the company is managed can also be useful in determining how much or how little you want to invest in Amazon.
2. Determine Your Investing Strategy for Amazon Stock
Just as you would with any investment, it’s important to establish goals for your investments in Amazon stock. Whether it’s doubling your money and pulling out or you’re looking to invest a lot more in a long-term strategy, having a clear picture of how Amazon stocks fit into your overall investment strategy is an important part of determining whether this stock is right for your portfolio.
It’s a good idea to follow the basic tenets of smart investing: buy low, sell high, and diversify your portfolio. As you’re analyzing Amazon’s share price, consider whether your investment budget will allow you to pursue a smart strategy with such a big-ticket order.
The next step is deciding how many Amazon shares you want to buy. Consider the following factors when doing so:
- Budget: The amount of money you have to invest is going to weigh heavily on how many Amazon shares you buy. The prices of stock will fluctuate over time, but recently Amazon’s shares have been more than $1,000.
- Risk: As with many of the companies traded on the NYSE, the biggest risks that pose a threat to Amazon are an increase in competition, uncertainty in their profit potential, and share price volatility.
- Portfolio: What does your current portfolio look like? You want to have a diversified portfolio to protect yourself in the event of a market crash, so if you already have a large percentage of your money invested in other tech stocks, you might want to consider other avenues.
As an investor, you have a choice when it comes to what you want to pay for Amazon shares. You can pay market price or choose to wait until shares drop to a more affordable price.
If you’re fine paying the market price for Amazon stock, you can trade using a market order, which allows you to buy at the current price, typically immediately. It’s important to note that market orders are not always executed on time, and in fast-moving markets, the last-traded price can vary greatly from the real-time quote that the market order goes through.
If you want to wait for the price of Amazon stock to fall to a price point you’re more comfortable with, you’ll want to use a limit order. This allows you to buy a stock at a specific price that you set. When Amazon’s stock drops to your price limit or lower, your order is executed, but it’s not always guaranteed. While limit orders aren’t guaranteed, they do help keep your budget in check.
Once you’ve done your due diligence and considered your investment strategy, the number of shares you want to buy, and how much you want to buy them for, you’re ready to execute your Amazon investments. There are two ways to do so:
By opening an online brokerage account with a trusted company, you’ll be able to find a broker to help you with your Amazon investment. Choose a broker that meets your needs by considering how often you want to trade, the level of service or research you need your broker to do, and their overall fee structure. Some charge little to no commission, depending on the type and quantity of stocks you want to buy or trade.
Financial Advisor or Broker
You can also work with a financial advisor or broker to buy shares of Amazon stock. Note that there is often a fee attached to doing so, but if this fits into your investment budget, you’ll have professional advice and guidance to ensure you’re making smart investment choices. Trusted financial advisors or brokerages include Charles Schwab, Fidelity, and TD Ameritrade.
Before you buy Amazon shares, be sure to conduct research and consider factors such as your budget and current investment portfolio. Doing so will ensure you make smart, tactical decisions when investing in Amazon.
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