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Amazon entered the scene in 1994 after former CEO Jeff Bezos decided to create an online marketplace for books. Fast-forward to 2022 and Amazon is, as we know, so much more. In fact, the company earned more than $469.8 billion in revenue in 2022, and it returned more than 76% to investors in 2020.
If you’d rather avoid working with a financial advisor, you can buy Amazon stocks on your own by opening a self-directed account with an online investment platform or stock trading app. Below are steps on how to go about it.
1. Set up a brokerage account
The quickest and easiest way for individuals to buy Amazon stock is to open up a brokerage account, according to Kavan Choksi, investor, founder, and business management and wealth consultant at KC Consulting.
If you’re investing in Amazon stock for the first time, he says, you should choose a brokerage that best suits your style of investing, consider the features you want your account to include, and compare the fee structures between different brokers to determine which one best meets your needs.
Brokerage accounts not only expose you to a variety of stocks, but they also let you invest in other types of assets, including ETFs, mutual funds, options, bonds, and more. And while not all brokers let you skip out on trading fees, the best platforms offer things like commission-free trading (i.e., you won’t have to pay a commission each time you exchange investments like stocks, ETFs, and options), multiple account and investment types, fractional shares, and flexible customer support.
“Buying Amazon stock directly has become a lot easier and more accessible to retail investors since their 20-for-1 stock split in early June 2022,” Choksi says. “Immediately after the split was executed, Amazon shares were trading at $125 per share, and have since dropped further to around $115 per share in recent days.”
This, he adds, has been the case with many other tech stocks, and it presents an opportunity for traders to buy Amazon stock directly at an affordable price.
In addition, you’ll encounter multiple account types when perusing a brokerage’s offerings. Individual brokerage accounts are typically the best move if you’re looking to trade on your own. If you’d like to trade with a partner, a joint brokerage account will be a better fit. However, not all trading platforms (e.g., Robinhood) offer joint accounts.
If you’re more of a long-term focused trader with an eye for less volatile investments, or if you’re nearing retirement, you should exercise caution when investing in Amazon. The stock has proven to be particularly volatile, so it may not be a smart choice for risk-averse traders.
“At the end of the day, I also recommend that investors consider meeting with a qualified wealth advisor — someone who can help assess your individual financial situation and chart a path forward to help you achieve your goals,” says Choksi.
2. Research Amazon’s financials
One of the best ways to build confidence in your decision to buy (or sell) a stock is to thoroughly research things like the company’s historical performance, earnings reports, balance sheets, and financial statements. Another good move for developing market knowledge is to keep up with all news pertaining to that stock’s industry, as well as other industries and assets, according to Choksi.
“Publicly traded companies will have earnings calls every quarter to inform investors on the current health of their business,” Choksi says. “Be sure to keep a lookout for analyst upgrades and downgrades a few days before a company’s scheduled earnings call, as these tend to set the tone for how investors are expected to react.”
Another thing to keep in mind is that Amazon isn’t just a site for online shopping. The e-commerce and tech giant has various other business services — including subscription services, web services, and advertising — that ultimately help it bring in billions in revenue.
Therefore, it’s a good idea to consider the state of all of its businesses when deciding whether to buy or sell. In addition, it helps to also be in the know on economic conditions, as these — in addition to investor demand — also greatly influence whether a stock rises or falls in value.
Researching, Choksi adds, doesn’t end after you start investing. “It’s important to read and study current market news and trends to see how they could impact your investments.”
3. Determine how much to invest and place an order
Now that you’ve decided Amazon stock is right for you, you’ll need to determine how much to invest in it initially (and you’ll later want to consider how frequently you’d like to buy more shares). But the initial investment amount varies per trader. Only you can decide which amount best suits your financial situation, and you’ll want to make sure it aligns with your risk tolerance, time horizon, personal budget, and investing goals.
But before you select an amount and place an order, experts recommend having an emergency fund (a savings fund with three to six months worth of living expenses) in place. This will help prevent financial hardship if your stocks succumb to temporary market downturn.
The next step is to select an order type and place the order. Order types essentially give you authority over the price at which an online broker executes your trades. There are generally four types:
While you can’t control the market or its fluctuations in price, you do in fact have a say over the price you pay for shares. This can help you invest in stocks like Amazon while keeping a good handle on your budget and personal finances.
4. Review your purchase and monitor your investment
After you’ve bought your shares, you’ll need to put a strategy in place for multiplying your returns. And you can do so without watching Amazon’s stock chart every hour (unless you’re a day trader). There are a couple of strategies you could use to get started. These include (but aren’t limited to) the following:
The strategies above can both help you generate returns, but neither is immune to price swings and market fluctuations. Choksi adds that you shouldn’t get unnerved or scared by sudden, short-term price movements. “It’s normal, especially in this environment,” he says.
However, if you ever need to sell, you can typically either enter in a dollar amount or number of shares on your broker’s website. Note, however, that capital gains taxes apply to investments you’ve sold.
The bottom line
If you’re interested in buying Amazon for the first time, but you don’t want to use a financial advisor or investment firm, you’ll need to set up a brokerage account to gain access to its stock. In addition, your options for Amazon exposure aren’t just limited to stocks. If you’re more risk-averse, you can also invest in funds — such as the Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) and the SPDR S&P 500 ETF Trust (SPY) — that contain the company.
But no matter which investment type you choose, you’ll ultimately want to research Amazon’s financials and performance to see whether the company aligns with your investing preferences. And it’s wise to keep an emergency fund and solid budget in place both before and after you’ve made your purchase.