When you think about investing in Amazon, you probably picture a guy in a suit and tie sitting at a desk. But, the truth is that anyone can invest in Amazon. So, how can you invest in Amazon?
You don’t need a lot of money to invest in the company. The retail giant has various ways for investors to purchase their stock, each with its advantages, drawbacks, and affordability.
This guide will teach you the various ways to invest in Amazon shares to grow your portfolio for every type of financial situation or goal.
Let’s jump right in with all you need to know!
Amazon is one of the most popular and successful companies in the world. It is an online retailer that sells everything from groceries and computers to movies and music.
Amazon was founded in 1994 by Jeff Bezos, with the company providing clients with a wide range of goods and services on a global platform. In July 2021, Bezos resigned as CEO, and Andy Jassy succeeded him.
Amazon has grown exponentially since its founding, with the e-commerce platform receiving 2.5 billion visits per month worldwide, peaking at 2.9 billion during the holiday shopping season. The company’s growth rate has drawn both novice and seasoned investors thanks to the recent surge in revenue and share price.
Amazon has received elite status as a blue-chip company, which indicates the company’s stock is very reliable. Usually, companies with the best market performance get the label.
On May 15, 1997, Amazon went public, and the IPO price was $18.00, or $0.075, adjusted for the stock splits that had taken place:
- June 2, 1998 (2-for-1 split)
- January 5, 1999 (3-for-1 split)
- September 1, 1999 (2-for-1 split)
- June 3, 2022 (20-for-1 split)
Amazon has a market cap of $878.16 billion, making them the 5th most valuable company in the world by market cap. In addition, Amazon stock is one of the most valuable stocks globally, previously closing at $83.12 on January 6, 2023.
How You Can Invest in Amazon
So, how can you invest in Amazon? You can purchase stocks using a variety of accounts and platforms.
Using an online brokerage, you can buy stocks on your own or engage a Robo-advisor or financial advisor to do it for you. The best approach will be the one that fits how much time and effort you want to devote to managing your finances.
Let’s consider the various options that investors have.
Online Brokerage Account
As an investor, you can access Amazon stock through an online brokerage account. Most brokers provide easy-to-use online brokerage accounts that let you make investments. With a brokerage account, you have complete control over the selection and buying of stocks.
When choosing an online brokerage account, it’s important to consider what kind of investor you are: do you want access to research tools? Are you looking for a specific type of investment vehicle? Do you want help with taxes? When choosing an online brokerage firm, many variables are at play that can help guide your decision-making process.
You can open an account with various companies, and they’ll all have different fees and policies. Some charge monthly fees, some charge per-trade fees, and some offer IRA accounts while others don’t allow them. In addition, some brokerages have no commissions or fees. So, choose a brokerage that best suits your financial goals and needs.
After registering an account with your chosen brokerage, you can buy Amazon stock using the Amazon ticker AMZN on the NASDAQ.
Buy Fractional Shares
If you can’t afford to purchase one Amazon stock, you can consider buying a fractional share, which is a fraction or portion of a total share. This makes investing in Amazon available to every type of investor, no matter the budget.
So, for example, if the share price for one Amazon stock is $3,000 and you can only afford to pay for an eighth of a share, you will need to invest $375 for that fractional share.
You can continue to buy fractional shares and profit from rising stock prices. Your investment will increase in value even if you don’t own a full share if the stock price rises. Doing this allows you to profit from purchasing Amazon shares without making a large upfront investment.
Using a Financial Advisor
Working with a financial advisor may be worthwhile if you’re finding it difficult to make financial decisions on your own or are unsure where to begin your financial journey. Financial advisors provide guidance and advice and can design plans or suggest certain investment vehicles and products.
Financial advisors are the more expensive option, as they are involved in every aspect of your investment journey and have the skills and knowledge to help you make decisions. Some charge a fixed commission each time they conduct business with you or sell a product. Others charge an hourly fee or a percentage of the assets they manage.
Let your financial advisor know that you want to buy Amazon shares, and they can assist you. Moreover, your financial advisor can help with the decision of when to sell your shares.
Because markets can be unpredictable, your investment strategy may need to adjust as highs and lows occur. A financial advisor can help you make smarter investing decisions whether you’re a novice investor or more seasoned. Advisors can also assist you in aligning the investments in your portfolio with the rest of your financial strategy.
It’s also imperative that you choose a financial advisor that is reliable and trustworthy. Several websites are available to assist with this information:
Set up a meeting with your financial advisor once you’ve thoroughly researched them to discuss your investment strategy, your financial objectives, and the fact that you need help investing in Amazon.
A straightforward, incredibly affordable approach to buying stocks is through Robo-advisors. Most Robo-advisors invest their funds in various exchange-traded fund (ETF) portfolios, buying the assets and managing the portfolio on your behalf. Although they are typically less expensive than financial advisors, you rarely get the advantage of a live person to guide your decisions and answer queries.
How can you invest in Amazon with ETFs?
ETFs are an alternative solution to buying individual Amazon shares. To track an underlying index, ETFs purchase many individual shares. Investing in an ETF is similar to buying stocks from a wide variety of businesses that belong to the same industry or are part of an S&P 500-style stock index. Like stocks, ETF shares are traded on exchanges, offering more diversity than holding a single stock.
Direct Stock Purchase Plan
Many blue-chip firms offer plans to buy their stock directly if you only want to invest in a few shares. Since August 2019, Amazon has provided a Direct Stock Purchase Plan (DSPP), where Amazon shares are purchased directly through Computershare.
However, using this service to invest in Amazon directly comes with commission fees for buying and selling Amazon stock and the requirement to fulfill specific initial and ongoing purchase minimum requirements.
A DSPP has the disadvantage that its shares are somewhat illiquid, making it challenging to resell them without a broker. Therefore, those with long-term investing interests typically benefit from these plans the most.
What You Should Know Before Investing in Amazon
Whether you’re investing in Amazon or any other company stock, following a few essential guidelines is important to protect yourself from financial risks.
When investing, you risk losing your money, so you must never invest more than you can afford to lose. The stock market is volatile and unpredictable, so always be mindful of this.
Before investing in Amazon, do your own research to decide if it’s the right investment for you and that it aligns with your personal financial goals.
If you’re unsure about investing in Amazon stock, consider ETFs as part of your investment strategy. This allows you to diversify your portfolio, making it a safer option for your investment portfolio.
Whether you invest in Amazon depends on your financial situation and short- and long-term goals. Amazon stock could increase your portfolio over time and may be a great addition to your investment portfolio.
Choose the best method for you individually to invest in Amazon, whether through an online brokerage, a financial advisor, ETFs, or index funds.
However, it’s crucial that you do your research to ensure that your investment aligns with your budget, investment goals, risk tolerance, trading style, and portfolio diversification, as there’s always a risk of loss.
The image featured at the top of this post is ©TY Lim/Shutterstock.com.