How to buy Microsoft stock (MSFT)

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Microsoft Corporation is a technology company that generates revenue by developing, licensing and supporting a range of software products and services, designing and selling hardware, and serving online advertising.

Products include operating systems for personal computers, servers, phones and other smart devices, server applications for distributed computing environments, business applications, desktop and server management tools, software development tools, and online advertising.

Microsoft also designs and sells hardware, including the Xbox 360 game and entertainment console.

The company offers cloud-based solutions that deliver software, services and content to customers over the internet through shared computing resources located in central data centers. Cloud revenue comes primarily from usage fees and ads.

Microsoft recently announced a multi-year, multi-billion dollar investment in Open AI, the company behind its artificial intelligence program ChatGPT.

What are the latest developments from Microsoft?

These are Microsoft’s performance figures for the last quarter of last year, released on January 24, 2023:

  • Q4 2022 revenue was $52.7 billion, up 2% year over year.

  • Net income for the last quarter of last year was $16.4 billion, down 12% from the same period in 2021.

  • Estimated revenue for the first quarter of 2023 is estimated to be between $50.5 billion and $51.5 billion.

  • The company recently announced that it will cut 10,000 jobs, roughly 5% of its workforce.

  • Microsoft recently announced a multi-year, multi-billion dollar investment in Open AI, the company behind its artificial intelligence program ChatGPT. This is the third phase of the partnership between the two companies that started in 2019.

Here’s what you need to know about buying and selling Microsoft stock.

Note: Investing in company stock gives no guarantees. It is possible to lose some or even all of your money when buying shares.

How to buy Microsoft shares?

Before you decide to open an account, you should set your investment goals, including the amount you want to invest, the length of time you plan to invest, whether you are comfortable with the risks involved, and whether you can afford to lose the money. .

If you want to buy Microsoft stock, the following steps will guide you through the process:

1) Open a trading account

Whether you are an experienced stock trader or a beginner, you need to open an account on a trading platform.

It’s worth your time to review the costs involved – most, if not all, platforms charge a share trading fee, and some may also charge an annual platform fee for holding shares.

A variety of trading platforms are available, from online DIY platforms like Hargreaves Lansdown, AJ Bell and interactive investor to app-based platforms like eToro and Trading212.

2) Where is Microsoft traded?

Microsoft’s marquee symbol is MSFT. Microsoft is traded on the Nasdaq in the US, which is open for trading Monday through Friday, 9:30am to 4:00pm (Eastern time).

Most trading platforms allow you to buy US stocks. You will be charged a currency fee (usually around 1%, but can range from 0.15% to 1.5% depending on your platform). Also, many platforms charge a slightly higher transaction fee for purchasing US stocks.

If you plan to trade US stocks on a regular basis, it’s worth looking at different platforms as their fees can vary significantly. Few trading platforms like IG allow you to keep your account in US dollars, which can reduce the currency you have to pay.

You will be required to complete a W-8BEN form, which will allow you to enjoy 30% to 15% discount on withholding tax on qualifying US dividends and interest.

If you own US stocks, you will also have a currency risk. If the pound weakens against the dollar, your shares will be worth more for the pound (and vice versa).

Any profits from US stocks, as with UK stocks, Capital gains taxsubject to your annual allowance (currently £12,300). You do not have to pay Capital Gains Tax if you hold stocks in a Personal Savings Account or Self-Investment Private Pension.

3) Do your research

To learn more about Microsoft, visit the company’s website. investor relations page.

It’s also worth comparing Microsoft’s valuation with other comparable global software companies. One way is to look at relative price-to-earnings ratios – stocks that trade with a high price-to-earnings ratio expect significant growth in the future.

Another useful research tool is 12-month stock price predictions from brokers on financial websites. There are currently about 40 brokers tracking Microsoft stock, and their price forecasts give an indication of the upside and downside risk of Microsoft stock price over the next year.

4) Should you invest monthly or in bulk?

People tend to buy shares either in bulk or by dripping their investments monthly over time.

Monthly investing is often referred to as a ‘pound cost averaging’ tool, so making regular contributions helps smooth out the ups and downs in the stock market. This provides some protection if the share price drops after you buy the stock, as you will be effectively investing in the average share price over the entire period.

However, if the share price is rising, dripping your investment may compromise capital growth and you may also pay more in share trading fees.

5) Place your order

When you’re ready to buy shares in Microsoft, log into your trading account. Type the MSFT ticker symbol and the number of shares you want to buy or the amount of money you want to invest.

Many platforms allow you to add a ‘stop loss’ after purchasing the shares, allowing you to limit your losses if the share price drops. For example, if you buy a share at £100 and set a stop loss of £90, your shares will be sold if the share price falls below £90 and your potential loss is capped at 10%.

6) Monitor Microsoft’s performance

Whether you own a few or many companies, you should regularly review how your stocks are performing.

Monitoring your portfolio allows you to make necessary adjustments, such as buying additional shares or selling a portion of your holding.

How do you sell your Microsoft stock?

When you want to sell your Microsoft shares, log in to your trading platform, type the ticker symbol (MSFT) and select the number of shares you want to sell.

If you made a profit, you may be required to pay Capital Gains Tax (CGT) on the sale of your shares. However, as mentioned earlier, this is not the case for tax-exempt packages such as Individual Savings Accounts.

How to invest indirectly in Microsoft?

You can make a profit if you invest in Microsoft stock, but holding stock in a single company is riskier than investing in a wide variety of stocks. A diversified portfolio should also reduce volatility.

One option is to invest indirectly in Microsoft by investing in a fund, investment trust, or exchange-traded fund (ETF) that, among others, holds Microsoft stock. These products provide a ready portfolio of stocks in a number of different companies.

There is a wide variety of options, including global, US and tech funds and investment trusts, with ETFs that track the Nasdaq index. However, you pay an annual management fee to retain these products.

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