Andrew Goldman has been writing for over 20 years and investing for the past 10 years. He currently writes about personal finance and investing for Wealthsimple. Andrew's past work has been published in The New York Times Magazine, Bloomberg Businessweek, New York Magazine and Wired. Television appearances include NBC's Today show as well as Fox News. Andrew holds a Bachelor of Arts (English) from the University of Texas. He and his wife Robin live in Westport, Connecticut with their two boys and a Bedlington terrier. In his spare time, he hosts “The Originals" podcast.
So you’re impressed with the cut of the Apple CEO Tim Cook's jib. Is your favorite article of clothing is a Steve Jobs I God t-shirt? Have you logged hundreds of hours in line in front of Apple stores? Do you regularly wake up in cold sweats from the nightmare that you own an Android phone? If so, it wouldn't be surprising that you'd want to actually own small sliver of your favorite company. Given that since between 2008 and 2016 Apple's stock price quintupled, we understand the attraction — just remember that past performance doesn't guarantee future results. Should you show up at Apple's Cupertino, CA headquarters waving a mitt full of money, you’ll sooner end up in a psychiatric ward rather than a shareholders meeting. So what’s it going to take for you to own some Apple stock (symbol: AAPL)?
It’s surprisingly easy to buy Apple stock, or any other that’s publicly traded. The process requires just two things: a broker to make the trade and enough money to buy at least one share. Unfortunately, we’re unable to help out with the money part, but we’ve got the other two covered here.
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1. Decide if Apple stock is the only stock you want to buy
We’d like a word before you buy anything. Are you absolutely sure you want to buy an individual stock? Stock picking is extraordinarily hard to do well. Famously rich stock picker Warren Buffett has spent the last decades discouraging pretty much everyone not named Warren Buffet from trying to make money picking individual stocks, he proclaimed: “The goal of the non-professional should not be to pick winners — neither he nor his 'helpers' can do that — but should rather be to own a cross-section of businesses that in aggregate are bound to do well.” One stock does not a cross section make. An aggregate of companies, not to mention bonds and real estate, can easily be bought by investing through a robo-advisor. It's up to you to decide if you know better than the financial Yoda with the $81 billion net worth.
Picking individuals stocks is a lot like playing the lottery. The top best performing 4% of stocks accounted for the entire wealth creation of the US stock market since 1926, which means there were lots and lots of losing stock pickers. Are you sure AAPL is going to continue its mind-blowing trajectory for the long haul?
If you're sure you want to own some AAPL, there’s a lot to be said for the “mad money” philosophy of investing. If you own a properly diversified investment portfolio and have a little discretionary, or “mad” money on hand you’d like to use to speculate, great. Roll the dice and be prepared to lose some of your investment. A good rule of thumb is that you should gamble with no more than 5% of your entire portfolio.
2. Choose where you want to purchase Apple stock
If you're ready to buy AAPL, you have a few choices.
The absolute easiest, cheapest way to buy stocks is through an online discount brokerage. Accounts can be opened in ten minutes if you have a social security or social insurance number, a home address, and an employer’s address (freelancers fret not—it’s totally AOK if your office happens to be five feet from your bed.)
Account minimums vary considerably in the minimum investment they require to open an account. They also normally charge a fee for each stock you trade. Most will assess a flat per-trade commission fee for any stock purchase, big or small, that generally range from $5-$10 per online trade. If you have a small amount of money to invest, look out for a provider that offers a low minimum investment to open an account. Some, even offer no minimum investment and in the last decade, a few investment providers have started offering commission-free trading, so every cent you pay goes directly into your stock investment, not into the brokerage’s coffers.
Human stock broker
Most brokerages do employ humans to execute stock trades, but they’ll charge a lot more if you need to use one, so do your best to crack the system without the assistance of another warm body. If you're nervous, you'll find scads of videos for buying stocks on all the major online brokerages on YouTube.
If you have a financial advisor, you may choose to execute the trade through him or her. The best advisors are “fee-only,” meaning they’ll either charge you a flat fee or take a small percentage of the value of your portfolio every year and hopefully won’t nickel and dime you with inflated trading fees for the purchase of one stock. Financial advisors are useful for providing you with an overall financial plan but you probably don't need one to trade individual stocks.
In general, automated investing services (sometimes called roboadvisors) like yours truly will put together a diversified basket of ETFs for their clients based on their investment goals rather than individual stocks. Wealthsimple’s patron saint, after all, is Harry Markowitz, the Nobel Prize winning economist whose Modern Portfolio Theory showed that diversification both minimized portfolio volatility while maximizing reward. So who knows—Amazon may well be one of the hundreds of stocks held within a Wealthsimple portfolio, but automated investing services aren’t generally the right place to go if you’re in the market for larger positions in individual stocks like Amazon.
3. Determine how much money you want to invest in Apple stock
Not to sound like a broken record, but again, try to avoid putting any more than 5% of your total investment portfolio in individual stocks. Currently, AAPL's share price is within the budget of most investors so you’ll have no trouble buying one or several shares, unlike, for instance, Google, which has become like the Dom Perignon of stock purchases.
4. Choose the right order type to buy Apple stock
There are three primary order types online platforms will provide for stock purchase.
If your money is burning a hole in your pocket and you need your AAPL right now, choose this type. If stock markets are open, it will execute the trade immediately, or just as soon as the market opens next. The price you will pay will be right around the latest traded price for the stock, give or take a few cents per share.
AAPL experiencing what looks like a momentary inflated stock price you suspect will soon float down to earth? Execute a limit order in this case. You’ll plug in the lowest price you’d be willing to pay for AAPL, and just as soon as it crosses that threshold (provided it ever does) your purchase of AAPL will be automatically executed.
Want to buy or sell AAPL but not at its current price? Pick any price you like. This is called a stop price. Perhaps you want to sell it if it goes below a certain threshold. For this, you would place what's called a sell-stop order. Or maybe you want to buy when it falls below a certain price. For this, you’d want to a buy-stop order. Either scenario would automatically trigger a market order, or purchase, at that moment.
5. Purchase Apple stock
You're so close to owning AAPL now! One word of caution: Online platforms are pretty careful to avoid executing unwanted trades, so they will generally show you a screen showing exactly what you’re about to buy before you buy it. It might look like you’ve already made an order for AAPL, but you may still need to hit a “trade,” or “execute trade” button. Most platforms will immediately email you a confirmation of your purchase. Congratulations, you stock trader you. Try not turn into a weeping mess when Tim Cook appears at the next Amazon shareholders meeting.
Got your Apple and now need help creating a diversified, low-cost portfolio? Consider Wealthsimple. We offer state of the art technology and the kind of personalized, friendly service you might have not thought imaginable from an automated investing service — sign up now.