How to Buy Microsoft Stock (MSFT) - Wealth Boundless (2024)

Microsoft is a multinational American tech company based in Redmond, Washington. They’re famous for Windows, Microsoft 365, and the Edge browser. They make Xbox game consoles and Surface computers. In 2022, they were No. 14 in Fortune 500, ranking among the largest US companies by revenue.

They’re a top software maker globally and one of the key players in tech, part of the Big Five alongside Alphabet (Google’s parent company), Amazon, Apple, and Meta (Facebook’s parent company).

If you’re considering investing in Microsoft, there are two primary approaches: you can either purchase the stock directly or invest in ETFs. This guide will provide you with all the information you need to get started.

How to Buy Microsoft Stock

Step 1: Open a Brokerage Account

To invest in Microsoft stock, you need to open an account with an online brokerage or investment app.If you don’t have one, you can check out our curated list of the best online brokers to help you start your search.

Brokers act as the intermediary between you and the stock market. They execute your trades, buying and selling stock on your behalf. There are a wide range of brokerage options available, including full-service brokers and robo-advisors.

Many brokers now offer fee-free stock trading. But before you start, check if there are any hidden fees or if you need to have a minimum amount in your account. To determine the type of account you need, consider your own investment goals.

• For long-term retirement savings, consider a Roth for tax advantages. If you’ve held your Roth IRA for at least five years, you can withdraw money without paying taxes or penalties. Unlike a Traditional IRA, a Roth IRA doesn’t have mandatory minimum withdrawals.
• If you’re saving for general goals like building wealth or a home down payment, a taxable investment account might be a more viable option. Unlike an IRA or a 401(k), you can withdraw your money at any time, for any reason, with no tax or penalty from a brokerage account.

Step 2: Research Microsoft’s Fundamentals

Before investing in any company, including Microsoft, it’s important to do thorough research. Here’s what you should do:

1. Access Microsoft’s financial reports, like the annual 10-K and quarterly 10-Q filings. As a publicly traded company, Microsoft is required to file regular financial and performance reports with the U.S. Securities and Exchange Commission (SEC). These reports provide valuable insights into the company’s financial health and prospects. You can find these reports on Microsoft’s investor relations site.

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2. Check out expert analyses from trusted sources like Fidelity, Morningstar, or Forbes. Brokerage firms, especially those dealing with big stocks like Microsoft, offer useful research tools and in-depth analysis. This will give you insights into Microsoft’s financial health, growth prospects, and potential risks.

Step 3: Decide How Much to Invest

Before you start investing in Microsoft stock, set your investment budget. Consider these factors:

1. Budget: Make sure your investment doesn’t interfere with your monthly expenses, emergency funds, and retirement savings.
2. Microsoft’s Stock Price: Understand its valuation and decide on the investment amount. While some platforms allow fractional share purchases, others require buying whole shares.
3. Risk Tolerance: Individual stocks carries inherent risks. Though Microsoft is well-established, you still have to assess your comfort level with risk to determine whether you want to diversify your investments with index funds or ETFs.
4. Investment Strategy: Decide between lump-sum purchase or regular investments using dollar-cost averaging which can reduce the impact of short-term market fluctuations.

Step 4: Place an Order

Once you have conducted thorough research and are ready to invest in Microsoft stock, follow these steps:

1. Log into your chosen trading or investment platform.
2. Enter Microsoft’s ticker symbol (MSFT) when prompted.
3. Specify the number of shares or the dollar amount you wish to invest.
4. Choose whether to execute a market order (buying at the current price) or a stop order (buying once the price reaches a specific level).

Step 5: Monitor Your Investment

To effectively manage your investments, set up a routine to review your portfolio’s performance:

1. Schedule regular check-ins, whether monthly, quarterly, or annually, to ensure the company continues moving in a positive direction.
2. Compare Microsoft’s returns over a given period against specific market benchmarks such as the S&P 500 or the Nasdaq 100 index. This analysis will help you understand how your investment performance compares to the overall market or specific industry sectors.
3. Monitor Microsoft’s financial reports and assess its financial management. Look for signs of effective resource allocation and growth opportunities that could impact the company’s future performance.

How to Sell Microsoft Stock

If you decide to sell your Microsoft shares, follow these steps:

1. Log into your brokerage’s trading platform or investment app.
2. Enter the ticker symbol and specify the number of shares or the dollar amount you wish to sell.
3. Consider potential capital gains taxes on your profits and consult with a tax professional to optimize your tax obligations.

Other Investment Options

If you want to invest in Microsoft but prefer a more diversified approach, consider index funds or ETFs that include Microsoft stock.

These funds allocate a portion of their holdings to Microsoft, allowing you to gain exposure to its growth while mitigating the risk associated with investing in individual stocks.

Index funds and ETFs offer a convenient and efficient way to participate in the potential growth of Microsoft without the need for extensive portfolio management.

Learn more: Best Investment Options