Amazon Stocks: Why and How to buy the stocks of the American e-commerce and retail giant?

Have you finally decided to add this e-commerce and retail giant to your portfolio? Here is some information you need to know before investing in Amazon stocks.

Looking for companies to invest in is not an easy decision; you want to reap some solid gains after all. There are many companies out there, and there are a variety of stocks you can buy in very simple steps. But there is only potential and not a certainty; trends and projections can only mean so much. At the end of the day, risks are still present, no matter how little they are.  But investing in stocks is for those willing to face risks in order to have high returns. And if you decided to continue, then start looking for the stocks you prefer.

If you plan to invest in stocks then at some point you probably thought of buying Amazon stocks. Amazon indeed came a long way since its beginning. And it is continuously reaching higher success and is currently one of the most successful e-commerce and retail companies all over the world. It is one of the few that has over a $1 trillion valuation. And these reasons are enough to make seasoned and new investors like you to think about whether to buy Amazon stocks.

Buying Amazon stocks is nearly as easy as shopping on their platform. But before buying their stocks, look first at the things you need to consider. Amazon stocks, like any other company stock, can provide you high returns. However, there are still some risks, so before committing to an investment, make sure that you know your risk tolerance, financial goals, the company's potential, and whether it fits your portfolio. If you think of these things then, you can make an informed investment decision.

So, here are the things you need to consider and the steps you need to do in buying Amazon stocks.

What is Amazon?

Amazon or Amazon.com, Inc is an American multinational technology giant that Jeff Bezos founded in 1994. This company is perhaps one of the most influential and most popular in the world. Though it started with the sale of books, Amazon today is selling a lot of different products. It has in store not only books but also software, consumer electronics, beauty products, industrial and scientific supplies, instruments, automotive items, personal care items, and a lot more of products.

But Amazon is not solely focused on e-commerce and retail, as it is also involved in cloud computing, digital streaming, and artificial intelligence. Amazon's participation and interest in these areas or industries can be seen in the different services they offer like Amazon Fresh, Amazon Prime, Alexa, Amazon Appstore, Kindle, Amazon Digital Game Store, Amazon Studios, etc.

Through its technological innovation, Amazon managed to gain a strong foothold in the market. With its strong foothold, Amazon became one of the biggest companies in the e-commerce and retail industry worldwide. It is also included as one of the five largest US companies in the information technology industry alongside Google, Apple, Microsoft, and Facebook. It is also a prime mover and one of the largest online marketplaces, AI assistant providers, cloud computing platforms, and live streaming platforms.

Amazon became one of the most successful American companies, and investors have been part of this success since 1997 when it became a publicly-traded company. And it is not too late; you can also become one of these investors if you decided to invest in their stocks.

Why should you invest in Amazon?

Amazon has proven its disruption and innovation capability since its birth in 1994. In just three years, it became a publicly-traded company to support further growth and expansion. Flash forward to 2021, it is still thriving and now heralded as one of the biggest companies worldwide. Likewise, it has a continued performance that far outpaced the broader market.

Amazon also proved itself to be resilient in the face of crises that affected many businesses. Unlike others, Amazon's earning and its stock prices are experiencing growth. With the continued advance of technology and its increasing proliferation and penetration, Amazon's further growth is not impossible.

Consumers are also transferring to the online market from the traditional ones, and Amazon is well-positioned to benefit from this. With the accelerating shift towards e-commerce, Amazon will be attracting more consumers due to its widespread popularity and innovation.

The company is also diversifying its source of revenues. Aside from e-commerce, it also ventured into cloud computing like the Amazon Web Services, which provides an abstract technical infrastructure to companies worldwide to ensure that their websites run smoothly. Artificial intelligence, advertising, food delivery, video content, etc., are also part of its diversified revenue streams.

But of course, investing is your sole decision. It is up to you whether you are going to invest in Amazon or not; after all, you may have your own qualifications and requirements. Another past performance is not a guarantee of future returns.

How to buy Amazon Stocks?

Investing is no longer that hard. You can invest even in the comfort of your homes, and buying Amazon stocks is no exception to this. You can buy stocks through these simple steps;

• Look for online brokerage firms. Many brokerage firms can help you start your investment journey like Robinhood, TD Ameritrade, Fidelity, Interactive Brokers, etc. You can buy Amazon stocks through their help. Before committing to any brokerage firm, look first at their fees. Choose the one with good features and low fees, or the one you think is the best fit for you.
• Open your account. After choosing your preferred brokerage firm, the next thing you should do is to sign-up for a brokerage account. Provide the information needed in the application form and submit it afterward.
• Confirm your account and fund it. Connect your bank account to the brokerage account you made. Some will have a verification mechanism. After passing the verification, you can proceed with the funding of your account.
• Find the stock. Look for the name or the stock symbol (ticker) "AMZN."
• Buy Stocks. Purchase the number of stocks you want through a market order. You can also opt for a limit order to buy the stocks when they reached your desired price.
• Check it. Track your stock and optimize your overall portfolio.

3 Things to Consider before buying Amazon Stocks

When buying stocks, there are some things that you should consider to make sure that you are investing in an investment that is right for you. And investing in Amazon stocks is no different. Before investing in Amazon, try to look and consider the following:

Investment Potential

It is not surprising if you want to invest in a well-known company or a company you frequently interact with. But remember that knowing the company from the perspective of a consumer is different from knowing it from an investor's perspective.

If you are going to invest in Amazon, do not base your decision on the previous and current prices. Again, previous performance is not a guarantee of future returns. Instead of looking at these things, scrutinize its investment potential through other merits. To do this, start doing stock research. Look for the company's management, revenue and revenue streams, net income and earnings, competition, and others.

Your Portfolio

Aside from potential, it would help if you also looked to yourself, to your portfolio. It would be best if you also considered your financial goals and financial situation.

Stocks, in general, can provide a higher return in the long-term but it is also riskier. So, naturally, some financial goals are a better fit for it because of the time factor. The price of Amazon stock is also high; it currently hovers above $3000, which is not a small investment.

Investing in a single company is risky since your portfolio is tied with it. If the company experienced a decline, then your portfolio will experience it too. Many investors opt for low-cost funds like index funds to avoid this too much dependency on a single company. Index funds by "mechanism" are more diversified since it tracks an index like S&P 500. By tracking an index, index funds naturally have lower investment risk.

Your Fund

Before investing, you should also consider your fund or financial situation. The price of Amazon stock is hovering at above $3000, so you should think of how much you can afford. This does not necessarily refer to the cash available to you right now.

Investing in stocks can provide higher returns in the long-term, so if you decide to invest in stocks, you will need to invest regularly to benefit from the potential long-term high returns fully. Most financial experts warn investors who will buy stocks using the money they will need in the next five years. But if you have some that you will not need immediately but fell short of the stock price, you can still invest through fractional shares, which allows investors to own a fraction of a share.

Bottomline

Buying Amazon stocks is like buying any other stock. It provides opportunities, but the associated risks to stocks are still present. Before investing, make sure that you are financially prepared and that you researched thoroughly before committing to it. Past performance is not an indicator that the future performance will be better and that you will gain high returns. So, weigh the risks and the potential benefits while at the same time consider the other essential factors.