Our partner, XM, lets you access a free demo account to apply your knowledge.
No hidden costs, no tricks.
You have probably seen the shares of global corporations growing recently and decided to grab your share by investing in some companies' stocks, but you don’t know where to start.
Amazon’s share price has grown more than 117% over the last 5 years, and shareholders more than doubled their investments, so it might be worth it to invest in this company’s shares as it continues to grow.
"We've [at Amazon] found over time that consumers are very careful about who they choose to partner with; they go with people and companies that are going to take care of them and that are going to provide a great customer experience and that has always been something that we have focused very squarely on" - Andy Jassy
In this guide, we have compiled everything you need to consider when buying Amazon shares, and how you can make money from your investment.
Amazon stocks are publicly traded on the stock exchange market, and to buy Amazon stocks you need a broker to grant you access to the market, so the process goes as follows:
The first thing you have to do in order to buy Amazon shares is to search for the right broker, and the right broker means a licensed and legitimate one because you don't want to fall for a scam.
Check with the broker if share trading is available, and that they offer Amazon shares because not all brokers allow you to trade in the stock exchange market. Then do some research about the commission taken by and spreads offered by the broker. This is something you need to know beforehand because some brokers charge several fees, and it might become expensive for you to trade.
You also need to make sure about the payment methods that are available, as some brokers have limited ways for clients to deposit money. Therefore, you need to check the accepted payment methods and currencies that they accept, and the locations to which they provide services.
Another important thing to check is the support channels. This is something you are going to need, especially if you have never traded before. Check how you can communicate with the broker if you encounter any issues.
Once you have found a good broker where you can buy Amazon stocks, you need to sign up with that broker and open up your trading account.
This process is very simple, and it is done fully on the broker’s website. All the instructions will be given by the broker, and it will only take a few minutes to get it done. Make sure you verify your account by submitting the required documentation. Brokers will ask you to submit proof of identity and proof of address, and you need to submit them within a specific timeframe. This is called KYC, or “Know Your Client”, and is something that licensed brokers need to do in order to comply with government regulations. It is set in place to prevent acts like money laundering.
This is the first real step to investing in Amazon stocks. You add capital to your trading account on the broker’s website. These are the funds you are going to use to buy Amazon shares.
Brokers allow traders to use several ways to add funds, with the most commonly used method being credit/debit cards and bank wire transfers. Besides these, brokers may offer some other options such as e-wallets and crypto-wallets to fund your account.
Credit/debit cards are mostly used because it is more convenient for clients. Other options are usually faster, such as e-wallets and crypto-wallets, and they might be safer since you are not providing your credit card information.
Some countries impose limitations on the use of crypto-wallets and e-wallets, so you need to ensure that it is acceptable in your country of residence. Make sure you review all the payment methods and select the one that is allowed in your country and the one that charges the least commission.
When you add funds, there is a processing time for the funds to arrive in your account. It ranges from instantly, in the case of using credit/debit cards, or can take as much as 5 business days when using wire transfers. Once done, you will see the amount you have deposited in your trading account, and now you are ready to buy the desired amount of Amazon shares.
Depending on the amount you have deposited and how much Amazon shares cost at that moment, you can decide how many shares to buy.
Usually, it is not a good idea to use all the money that you have deposited at once. Rather, you can use some of it and keep the rest for other trading opportunities, or as a backup plan. Besides that, some brokers enable you to buy fractional shares, which means that you can buy just part of that stock if that might be too costly for you to buy standard lots.
To buy Amazon stocks now takes only a click of a button, and your first trading position in the market will be open. At this point, you will start facing some trading terminology, and it will be to your advantage if you are familiar with trading other assets. If not, try brushing up on some trading lingo. However, most brokers show you how to invest in Amazon and earn money. We have listed below some of the top brokers to get you started:
Alternatively, you can keep your money on standby and decide to purchase the stocks later, this is in case the stock price is declining, and you are waiting for the turning point. In that case, you can use the buy option so that when the stock price reaches a certain point or a specific date, your trading position will be open.
The job is not done when you purchase Amazon stocks. You are going to need to keep track of the stock price and the news surrounding the company.
Now that you know how to buy Amazon shares, you need to know how to control your trade so that you can make the most out of it. From this point, every news article or event that affects the US economy in general, or Amazon corporation in particular, is going to affect your investment.
Depending on the goal and plan you have in mind, whether you decide to hold onto the investment for months and sell the position whenever or just hang on for a week and then dump the stock, hopefully, the stock price increases, and you realize some gains.
On the other hand, you might aim for short-term gains, and wait for the stock price to slightly increase, reaping small gains, and then repeating the same, which is known as the scalping strategy.
Besides that, there are other control measures that you can place on your market position, such as stop-loss and take-profit orders which help you set the maximum you are willing to lose or gain before the market position automatically closes.
In a nutshell, it is worth learning how to invest in Amazon stock, there are many reasons why we think it is a good buy.
The company is ever-growing in the technology market, and its market share has always been growing over the years. Its market share of 34% in 2016, reached 47% in 2020.
In 2021, Amazon's e-commerce market share in the US was over 55%, and although 2022 has been a slow year for most tech-related companies, Amazon keeps on innovating and is sure to be at the top for a long time to come.
The other reason why we think it might be worth buying Amazon stock is the fact that every holiday season represents a gaining opportunity for the company and for its shareholders. Year after year, when the holiday season rolls in, the company breaks sales records. In addition to that, Amazon Web Services is another profit generator for Amazon, which represents around 12% of the company’s total revenue, with a growth rate of 32%, which is a great deal for the company and its shareholders.
The company has always been incorporating artificial intelligence software in its services and systems. It's utilizing more than 350,000 mobile unit robots that work side-by-side with humans.
So, with the world advancing speedily toward AI applications, it doesn't seem that the company is holding back, rather it is expected to be a pioneer in the field.
"The best customer service is if the customer doesn’t need to call you, doesn’t need to talk to you. It just works." - Jeff Bezos
You need to register with a broker that allows you to trade in the stock market, then after you add funds to your trading account you can start buying the desired amount of Amazon stocks.
It is up to you, you can buy 1 or more stocks if you have enough funds in your trading account on the broker’s website. Alternatively, if you have a limited budget, you can find brokers that allow fractional share trading, where you can buy a fraction of a share.
It depends on the company’s activity and the global events and news that might affect the operations of the company. However, the ongoing technological advancements at Amazon are promising. Historically, Amazon has proved its stocks are profitable in the longer term, and shareholders doubled their investments during 2020. But this alone does not necessarily mean that Amazon stock is always profitable.
Long-term investment at Amazon is usually a better idea, in 2020 the stock price went from $92.30 to $170.09 in under 6 months. As a result of 2022's recession fears, the stock price is slightly lower but expected to reach new rights over the coming years.
For a limited budget, you will need to find a broker that allows fractional share trading, which means that you can buy a smaller fraction of the whole stock or less than a stock. Fractional share trading is becoming more popular. When you buy fractional shares, your gains are going to be lower, because you are going to gain returns on the amount that you have invested.