Minimum stock purchase
originally posted: 11/22/2006 reposted: 2/18/2011 This post has not been recently reviewed or revised by the author and may be out of date. If you notice an error or are in doubt, please send a new question by email or ask for an update. Email asktony@tonynovak.com.
Q: I am a beginner investor (actually its my very first time to buy stock). I am interested in buying a stock and I am going to open an investment account. But I am not very clear about some concepts of the stock market. 1) Who determine the order size of the stock I am going to buy? myself or the company? 2) How do I know what is the minimum order size?
A: There is no longer any minimum order size for stock purchases so you may specify either the number of shares you wish to buy or the dollar amount that you wish to purchase. For example, an order could be placed for 1.456 shares of IBM stock or alternately, you could buy $78.56 of HD stock at the market price. The trading system will accept your order either way. Keep two things in mind: 1) most investment firms have a minimum cash deposit that is required to open a small account like this. This is not related to the stock purchase, but rather a prerequisite to open an account. 2) The trading fees reduce your overall returns so that your net results from stock purchased in denominations of less than $2000 will be significantly lower than for other investment options better-suited for small denominations.
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