Since Bill Gates and Paul Allen founded Microsoft in 1975, it is one of the world’s largest technology companies, generating cloud computing support from computers and software to gaming systems and space exploration.
All growth means robust returns. In its most recent quarterly report, Microsoft’s revenues were $ 66.1 billion ($ 51.7 billion USD), up 20% from the same period last year. If you want to add some impressive financing to your portfolio, here’s what you need to know to buy Microsoft stock.
How to Buy Microsoft Stock (MSFT)
1. Choose a brokerage
To purchase MSFT, you need an account with an online brokerage or investment app. Fees and account minimums vary depending on the platform you use, so be sure to research these before you sign up. Check out our picks for the best online brokers and best investment apps to help you do your research.
2. Set investment goals
Once you have chosen a brokerage or investment app, think about your investment goals. Determining your goals determines what type of account you need:
- Retiring. If you want to invest for your golden years, the Registered Retirement Savings Plan (RRSP) is the best option because it is a tax-deferred savings account, so your return on the stock within the account will not be taxed as income until you withdraw it.
- Building wealth. If you want to build your wealth simply, go with a general taxable investment account. You do not get a tax break, but you are not limited in terms of how much you can invest and you do not have to withdraw money under the age of 71 or convert your RRSP to a Registered Retirement Income Fund (RRIF). ) You start accepting payments by age 55 and by the end of the calendar year.
3. Decide how much you want to invest
If you don’t have a net worth like Bill Gates, you probably aren’t ready to buy a big stake in Microsoft despite the company’s belated performance. When deciding how much to put in any one stock, ask yourself the following questions:
- What is your budget? You don’t want to put any money you need into stocks to cover your immediate expenses. But once you categorize them and reserve some for emergency funds and retirement savings, you are free to invest in whatever is left.
- How much is Microsoft’s current price? Microsoft is not cheap; In December 2021, its stock price topped $ 389 ($ 300 USD), and since June 2021, it has risen above $ 324 ($ 250 USD) per share. In Canada, only two brokers, WealthSimple and Interactive Brokers, allow you to buy partial shares, while others require you to buy the stock in full, meaning it costs you hundreds to buy the same share.
- How comfortable are you in terms of investment and risk? When you invest in a single stock, even well-known companies such as Microsoft, you take more risk than investing in a diversified fund. You will experience each and every high (and low) that MSFT goes through and you may lose a considerable amount of money quickly. If that makes you tense, you may be better off with index funds and exchange-traded funds (ETFs).
- How does Microsoft fit into your existing investment strategy? Matt Weber, a Chartered Financial Analyst (CFA) at UMB Bank, says, “Microsoft serves as a key or foundation holder in many different portfolios.” You want to figure out what may be complementary.
- How often do you plan to buy MSFT? Instead of investing thousands at a time, you can use the dollar cost averaging to buy Microsoft’s small amount at regular intervals, spread the cost, reduce your chances of entry when the price is high, and potentially reduce the average cost you pay per share.
4. Do your homework on Microsoft
Before investing money in any company, it pays to do your research. The US Securities and Exchange Commission (SEC) requires publicly traded companies such as Microsoft to submit information on their financial and performance on a quarterly and annual basis. You can find Form 10-Q (Quarterly Reports) or Form 10-Q (Annual Reports) on the company’s investor relations site.
You can also use tools like Globe Investor or Forbes to get insights and market analytics from industry experts.
5. Determine the type of your order and place your order
Once you’re ready to place your order, log into your business or investment platform and enter the number or dollar amount of shares you want to buy, along with Microsoft’s ticker mark (MSFT). You can choose to buy Microsoft stock at its current price — called a market order — or you can place a stop order to buy it once it reaches a certain price.
Microsoft trades on the world’s second-largest stock exchange, Nasdaq. Nasdaq’s normal trading hours are 9:30 am to 4:00 pm ET Monday to Friday, although your brokerage can provide you with access to pre-market and extended trading hours.
6. Keep currency conversion fees and taxes in mind
If you are buying and selling American stock such as MSFT from Canada, you are paying currency conversion fees of 1% to 4% (in addition to the exchange rate) on both sides of the transaction- buy and sell. These fees can be avoided by opening a US dollar bank account or by using Norbert’s Gambit to keep the money you use to buy US stocks in US currency.
When you buy a stock or ETF it is an interlist on American and Canadian stock exchanges. You buy Canadian shares of that stock or ETF, then you ask your brokerage to “journal over” your Canadian shares and convert them into American shares of the same stock, then you can sell your American shares in US currency and use US dollars without any US dollars like MSFT The result is to buy stock or ETF.
If your MSFT stock is within the RRSP, the IRS recognizes Canada’s registered retirement accounts so you don’t pay any tax on it. However, if you receive a dividend from your US-based investment, you are subject to a 15% withholding tax from Uncle Sam, which is still 30% lower than what other countries pay.
7. Evaluate the performance of Microsoft
No matter what you invest in, it is always wise to periodically review your investment performance and see how it measures up. You want to start by determining MSFT’s returns for a given period so you can compare it to specific market benchmarks such as the S&P 500 or the Nasdaq 100 Index.
This will give you an idea of how your investment performance will accumulate to the performance of specific industries or the overall stock market. You can track its finances every quarter or year to determine if it is using its financial resources wisely.
How to Sell Microsoft Shares
If you want to sell your Microsoft stock, log into your brokerage’s trading platform or investment app and type the ticker symbol and the number or dollar amount of shares you want to sell.
Before selling any shares, make sure you consider capital gains taxes. If stock prices rise after you invest your money, you will be taxed on your profits. Thanks to Canadians, capital gains (50%) are only charged by the CRA, not the IRS. If you are able to earn more than $ 5 million USD on your American investment, your estate will have to pay an estate tax to the US when you die. If you want to reduce the amount of tax you have to pay in both countries, contact a tax professional.
Other ways to invest in Microsoft
If you want to invest in MSFT but want to reduce your risk, you can look at index funds or ETFs that have it. Finding funds to do is not difficult: based on its market capitalization, Microsoft typically holds 6% of the S&P 500 funds and 10% of the Nasdaq 100 funds.
These funds provide a great opportunity for more people to be exposed to Microsoft’s historic growth.
“From the point of view of portfolio management, your portfolio should be large enough to buy individual stocks while maintaining enough diversity,” says Weber. If you don’t have the money (or time) to manage your own diversified portfolio, ETFs and index funds offer a great alternative.