How to Invest in Microsoft (MSFT)


Microsoft has grown into one of the world’s top technological firms since its founding in 1975 by Bill Gates and Paul Allen, offering everything from computers and software to gaming systems and cloud computing assistance for space research.

All of this expansion translates to increased income. Microsoft’s revenue was $45.3 billion in the third quarter of the fiscal year 2021, up 22 percent from the same time the previous fiscal year. And its stock price has risen by more than 45 percent this year.

Here’s everything you need to know about buying Microsoft shares if you want to add some of those excellent financials to your portfolio.

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How Do I Purchase Microsoft Stock? (MSFT)

1. Select a Brokerage Firm

You’ll need an account with an online brokerage or an investing app to purchase MSFT. Fees and account minimums vary depending on the platform, so do your homework before signing up. To help you with your research, check out our recommendations for the finest online brokers and investing applications.

2. Establish Investment Objectives

Consider your investment objectives once you’ve chosen a brokerage or investment app. Identifying your goals can help you select the sort of account you require:

  • Retirement. Because of its substantial tax benefits, an individual retirement account (IRA) is your best option if you wish to save for your senior years. Depending on your financial condition, you’ll have to choose between a standard IRA and a Roth IRA, each of which has its own set of advantages.
  • The expense of college and education. Using tax-advantaged funds, a 529 plan allows you to invest money to pay for part or all of a loved one’s tuition and other educational expenditures.
  • You are increasing your net worth. If all you want is to develop your money, a traditional taxable investment account is the way to go. You won’t receive a tax advantage, but you won’t be restricted in when or how you may take your funds.

3. Decide how much money you want to put into it.

Unless you have Bill Gates’ net worth, you probably aren’t ready to acquire a significant share in Microsoft, despite the company’s recent strong performance. Ask yourself the following questions when deciding how much to invest in each stock:

  • What is your financial plan? You don’t want to invest money that you’ll need to fund urgent expenditures inequities. However, after you’ve taken care of things and put aside some money for an emergency fund and retirement savings, you may invest the rest.
  • What is the current pricing of Microsoft? Microsoft isn’t cheap; its stock price hit $300 in December 2021, and it’s remained over $250 per share since June 2021. While some brokerages enable you to purchase fractional shares, others demand you to buy total shares, which might cost you hundreds of dollars.
  • How comfortable are you with risk and investing? You take on greater risk when you buy in a single company, even well-known corporations like Microsoft, than if you invest in a diversified portfolio. You’ll be exposed to every high (and low) that MSFT experiences, and you might lose a lot of money rapidly. If that makes you uneasy, index funds and exchange-traded funds may be better options (ETFs).
  • What role does Microsoft play in your current investing strategy? According to Matt Weber, a certified financial analyst (CFA) of UMB Bank, “Microsoft may function as a fundamental or basic holding across many different portfolios.” “The stock is unusual in that it offers characteristics that appeal to growth, value, and income investors.” You’ll want to consider how Microsoft may fit into your portfolio and complement your current assets.
  • How often do you intend to purchase MSFT? Instead of spending thousands of dollars all at once, you might utilize dollar-cost averaging to purchase smaller quantities of Microsoft at regular intervals, spreading out the cost, minimizing the chances of buying at a high price, and perhaps lowering the average cost per share.

4. Use Microsoft to do your homework

It pays to do your homework before investing in any firm. The Securities and Exchange Commission (SEC) in the United States mandates publicly listed corporations like Microsoft to submit financial and performance data quarterly and yearly. On the company’s investor relations webpage, you may access Form 10-Q (quarterly reports) or Form 10-K (annual reports).

You may also acquire market information and assessments from industry professionals using platforms like Morningstar or Forbes.

5. Decide on your order type and place it.

When you’re ready, go to your trading or investing platform and type in Microsoft’s ticker symbol (MSFT), as well as the number of shares or dollar amount you wish to purchase. You may put a market order to purchase Microsoft stock at its current price or a stop order to buy it once it reaches a particular price.

The Nasdaq, the world’s second-largest stock market, trades Microsoft. Nasdaq’s regular trading hours are 9:30 a.m. to 4:00 p.m. ET Monday through Friday; however, your brokerage may provide pre-and after-market extended trading hours.

6. Assess Microsoft’s Efficiency

Whatever you invest in, it’s always a good idea to regularly check in on your investment’s performance to see how it’s doing. You’ll want to start by calculating MSFT’s returns over a specific time so you can compare them to market benchmarks like the S& P 500 or the Nasdaq 100 index.

This will show you how your investment’s success compares to the performance of specific sectors or the stock market as a whole. You may also look at its financials for a quarter or year to see whether it’s making good use of its funds.

What is the Best Way to Sell Microsoft Stock?

Log onto your brokerage’s trading platform or investing app and enter in the ticker symbol, as well as the number of shares or dollar amount you wish to sell.

Make sure you consider capital gains taxes before selling any shares. Unless you invest in a tax-advantaged account, you will be taxed on your earnings if stock prices have increased since you invested. Consult a tax expert if you wish to reduce the amount you may owe.

Investing in Microsoft in Other Ways

If you want to invest in MSFT but don’t want to take on too much risk, index funds or exchange-traded funds (ETFs) that hold it are a good option. According to market capitalization, it’s not difficult to locate funding: Microsoft accounts for around 6% of S& P 500 funds and 10% of Nasdaq 100 funds.

Most individuals will benefit from Microsoft’s historic growth by investing in these funds.

“From a portfolio management standpoint,” Weber adds, “your portfolio has to be big enough to acquire individual equities while preserving appropriate diversity.” ETFs and index funds are an excellent choice if you don’t have the money (or time) to manage an adequately diversified portfolio on your own.


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