Whether your investment portfolio is big or small, Microsoft stock may be worth a spot in it. The iconic company produces an impressive range of software, electronics, and other services — making it a stable option for investors looking to make a secure, long-term buy.
In this article, we’ll discuss some of the key considerations, processes, and strategies to think about before making a purchase of Microsoft stock. Whether it’s your first or tenth time buying stocks, you’ll come away a more informed, experienced investor.
Understanding Microsoft as an Investment
As Microsoft’s operations span across the technology and entertainment industries, its stock price generally follows those industries’ overall trends. Its share prices tend to remain relatively stable over the long run, making it an attractive buy for conservative investors.
Microsoft’s current market capitalization is just over $1.2 trillion. This figure has been increasing steadily with the rise of cloud-based computing and the continued expansion of Microsoft’s business interests. Microsoft’s estimated earnings per share (EPS) is $5.62, meaning that each share of stock is estimated to earn 5.62 dollars in the current year.
The company is widely known for its leadership in software provision and computer hardware. Still, it has also emerged as a leader in artificial intelligence, cloud computing, and other hardware and software services. This diversity of interests has helped keep its stock price steady, even during market downturns.
Understanding Your Budget and Risk Tolerance
A key consideration to factor in before making any stock purchase, including Microsoft’s, is the amount of money you’re willing to invest.
Your risk tolerance will also be an important factor. Microsoft stock has historically proven resilient in the face of market downturns and fluctuations, yet it’s important to remain mindful of the potential losses.
If you’re a conservative investor, you may want to opt for a lower number of shares to minimize the potential risk. High-risk investors, on the other hand, may opt to purchase a larger number of shares to take advantage of the potential rewards.
Do Your Research
The most important step in any stock-buying process is researching. Familiarizing yourself with the company’s activities, history, operations, and financial performance will help you make a more informed decision.
Analyzing the company’s financials — balance sheet, income statement, cash flow statement, and other applicable documents — will also be important. Make sure to also look into the company’s debt and liabilities. Knowing how much money the company is investing into its operations and whether it’s in a prime financial condition will offer you more clarity on your decision.
Be sure to also read industry and market reports. Microsoft’s stock prices are tied to those of the broader industry and market. Keeping up with the latest news and trends will give you valuable insight into what the future may hold.
Finding a Platform to Buy Microsoft Stock
Now that you’ve done your research and analyzed Microsoft’s financials, it’s time to select a platform to make your purchase. There are many financial institutions, brokers, and platforms that offer stock trading. It’s best to compare several of them to find the one that’s the most cost-effective and secure for you.
Some brokers will require a minimum initial deposit to open an account, but you should also pay close attention to their trading fees and commissions. Make sure to read the terms and conditions carefully before signing any agreement with a platform.
You ‘ll also need to decide how you want to determine the price at which to purchase your stock. You can either opt to buy at market price or set a limit order that will only be filled at a predetermined price and quantity.
Making a Microsoft Stock Purchase
Once you’ve selected your platform and made your initial deposit, you’re ready to buy your Microsoft stock.
Simply follow the instructions provided by your platform. For example, if you’re using TD Ameritrade, enter the number of shares you’d like to buy, enter MSFT (Microsoft’s ticker symbol) in the appropriate fields, and click “buy”.
Once the purchase has been made, the stock will represent a part of your portfolio.
Managing Your Microsoft Stock Holdings
As with any stock portfolio, you’ll now need to strategically manage and monitor your Microsoft stock. Keeping an eye on the company’s performance and the relevant industry news on a regular basis will help you know when it might be worthwhile to buy more or when to cut your losses.
You may also want to consider using some tried-and-true strategies such as dollar-cost averaging or relatively safe options trading. Knowing how to properly diversify your portfolio and how to stay in touch with the latest data points will help you better protect your investments.
Investing in Microsoft stock can be a great way to diversify your portfolio, diversify your risk, and benefit from the steadiness of the company’s operations. To make the most out of your purchase, it’s important to understand the company’s performance, choose the best platform to buy, and manage your investments strategically. Doing your research and coming up with a tailored plan will help ensure your Microsoft stock investments pay off down the line.
