How to invest in stocks in 2023 – Beginner’s guide

To the uninitiated, investing in the stock market can seem a daunting prospect. After all, it’s a topic steeped in specialist knowledge, and will likely take a lifetime to master.

But often overlooked is the fact that, particularly in the modern era of technology, investing in stocks is perfectly accessible for beginners. Besides a basic level of education and a degree of discipline, an intuitive online brokerage platform is all that is required.

In this guide, we will examine all the fundamentals of investing in the stock market for the first time, in addition to some of the best online trading platforms available today.

eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk.

eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk.

Investing in stocks in the US – The basics

As a professional and academic field in its own right, there is a world of knowledge to attain on the financial markets and how to buy stocks. But for a rookie investor, a basic grasp on risk, reward and regulation is all that is required to take the first steps.

With that in mind, here is an overview of some of the fundamental concepts of buying stocks as a first time investor.

What are stocks?

The stock market is a financial marketplace where investors buy and sell ownership shares in publicly traded companies. It serves as a platform for businesses to raise capital by issuing stocks, while investors can profit from the company’s success. Stock prices fluctuate based on supply and demand, economic conditions, and company performance.

Listing on the stock market provides companies with a vital avenue to raise capital by selling shares to the public. Additionally, stock market presence enhances a company’s visibility, credibility, and liquidity, attracting investors and fostering long-term growth.

Buying shares in a company means acquiring ownership stakes in that business. Investors purchase shares through a stock exchange, becoming partial owners and entitled to a portion of the company’s profits, usually in the form of dividends. Shareholders may also benefit from capital appreciation if the stock price rises.

Why do people invest in stocks?

People invest in stocks primarily to grow wealth. Long-term investors aim for capital appreciation and dividend income, capitalizing on a company’s overall growth and stability. This strategy involves holding onto stocks for extended periods.

Short-term investors, or traders, focus on market fluctuations and may engage in day trading or swing trading to capitalize on price movements. They seek quick profits but face higher risks.

Investors may also employ value investing, emphasizing undervalued stocks, or growth investing, targeting companies with high growth potential.

Ultimately, stock investing allows individuals to participate in a company’s success, benefit from market growth, and build a diversified portfolio aligned with their financial goals.

Taxes and regulations

In the United States, taxes on buying and selling shares primarily involve capital gains. Capital gains tax is incurred when a stock is sold for profit, with rates varying based on the holding period. Short-term gains (held for less than a year) are taxed at ordinary income rates, while long-term gains enjoy preferential rates. Losses can offset gains for tax purposes.

Additionally, certain investment accounts, like Individual Retirement Accounts (IRAs) or 401(k)s, provide tax advantages. Investors should be mindful of wash-sale rules, prohibiting the repurchase of a substantially identical security within 30 days of selling at a loss.

Regulations are overseen by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). These entities ensure fair practices, disclosure of relevant information, and protect investors from fraudulent activities, promoting a transparent and orderly market.

Where to invest in stocks in 2023

Investors can buy stocks through various online brokerage platforms, with eToro being a popular choice. eToro offers a user-friendly interface, low minimum deposits, and supports fractional share trading, making it accessible for beginners.

Other popular choices include Robinhood, Webull and Charles Schwab, all of which are known for offering numerous trading options, user-friendly interfaces and commission free structures.

1. eToro – Best platform to invest in stocks

eToro is a social trading platform that offers access to numerous different financial markets and asset classes. Since its launch in 2006, eToro has become home to more than 20 million traders worldwide. The broker offers competitive trading and non-trading fees, with free stock and ETF trading, and no account or deposit fees.

Being a social trading platform means that users can communicate and interact with the rest of the trading community on the eToro platform, much like social networking sites.

In addition to social trading, eToro offers copy trading – a feature allowing the user to copy the trades of professional investors.

The minimum deposit for US-based investors is just $50, and there are no deposit or account fees. This means the entry point for buying NIO stock is highly accessible and suitable for beginners. This is possible because eToro supports fractional share trading, meaning that traders can acquire a portion of a more valuable stock.

eToro fees

eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk.

2. Robinhood – Invest in stocks commission-free

Robinhood is a zero commission trading platform renowned for its user-friendly interface. Since its inception, it has gained widespread popularity, attracting millions of users.

Robinhood stands out for its no-commission model, offering zero trading fees trades on stocks, ETFs, and options. Users can engage in social trading, fostering a community atmosphere similar to social networks.

With a low minimum deposit, accessible fractional share trading, and no account fees, Robinhood provides an affordable entry point for investors, making it particularly suitable for beginners.

Robinhood fees

3. Charles Schwab – Educational tools and resources for stock trading

Charles Schwab is a renowned online brokerage platform known for its extensive range of investment options and comprehensive services. With a reputation for reliability, it caters to a diverse investor base.

Offering a user-friendly interface, Charles Schwab provides access to various financial markets and investment products. While not a zero fees platform, it compensates with a robust suite of research tools and educational resources.

Charles Schwab’s platform supports different account types, making it suitable for both beginners and advanced investors. With a focus on customer service and a commitment to innovation, Charles Schwab is a prominent choice for those seeking a well-rounded online brokerage experience. Verify current details on their official website for the latest information.

4. Webull – A modern and affordable brokerage platform

Webull is a dynamic commission-free trading platform that has gained popularity for its intuitive design and advanced features. Launched in 2018, Webull provides a user-friendly interface with real-time market data and analysis tools. 

With a focus on equities and options, it caters to both novice and experienced traders. Webull stands out for offering commission-free trades on a variety of assets, including stocks and ETFs. The platform supports extended trading hours, providing flexibility for active traders.

Webull’s accessible mobile app and desktop platform, along with no minimum deposit requirements, make it an attractive choice for those seeking a modern and affordable trading experience.

How to invest in stocks in 2023

In general, investing in stocks through eToro consists of four key stages: Opening a live trading account; verifying your identity (as per Know Your Customer regulations); depositing funds; and purchasing the stock.

Here is a more detailed view on how to buy stocks.

Step 1: Open a brokerage account with eToro

First, you must visit the eToro website and create a free account there. In order to get your account up and running, follow the instructions on the screen. A few basic personal details will need to be entered at this point.

Step 2: Verify your account

Now that you have set up an account, you need to verify it to be able to add funds to it. You will have to provide eToro with two forms of government ID to complete this process. A driver’s license or passport is a form of proof of identity, while a utility bill or bank statement is a form of proof of address. eToro will aim to verify these documents within minutes of receipt.

Step 3: Fund your account

Your account will be able to receive funds as soon as you have successfully verified it. The minimum deposit amount is only $50, and no maximum amount can be deposited. Click on the ‘Add funds’ button in the left drop-down menu to open the deposit page. Several payment methods are available, including debit and credit cards, bank transfers, and e-wallets such as PayPal.

Step 4: Search for NIO (NIO) stock

The NIO ticker can be searched in the eToro search bar by simply typing NIO. This is where you can find the latest news related to NIO, statistics, charts with the live performance of the stock, and more.

Step 5: Place an order for NIO (NIO) stock

Once your eToro account is funded, you can open a position. After selecting NIO from the drop-down list, on the blue button that says ‘Trade’ to place your order. Then, fill out the order form, and your NIO position will be added.

Things to consider before investing in stocks

While investing in the stock market can be an accessible and rewarding endeavor for beginners, it is crucial to approach it with caution and prudence.

From understanding your financial goals to selecting the right investment vehicle, here are some considerations for building a successful and sustainable investment strategy.

Set clear goals

Understanding why you want to invest will guide every aspect of your investment strategy. Some have sights set on a retirement plan or a specific milestone (such as purchasing a house), while others may simply be seeking a source of passive income.

Crucially, an individual’s goal will directly inform the timeline. Short-term goals might include saving for a vacation or a down payment, while long-term goals could involve building a nest egg for retirement. Each goal may necessitate a different investment approach, aligning risk and return with the timeframe.

Working towards clear objectives may also encourage a greater degree of prudence in some investors. For instance, those saving for a specific goal are less likely to make aggressive decisions.

Assess risk tolerance

Another key element of goal setting is assessing risk tolerance. In order to make sensible and informed decisions in the stock market, one must possess a strong understanding of their own financial circumstances and appetite.

This not only requires an initial assessment, but continual reassessment throughout an investment journey, particularly as life circumstances change. These conclusions should directly inform which stocks you pick, and how much capital you commit to them.

If in doubt, the rule of thumb is never invest more than you can afford to lose.

Understand investment vehicles

Buying stocks through a platform such as eToro is fairly self explanatory. However, it is important to develop a basic understanding of the various other investment avenues there are available.

Some key examples included bonds (a low-risk, fixed-income investment) pooled investments such as mutual funds (a diversified portfolio of stocks, bonds and other securities), and cryptocurrencies.

Understanding a range of investment vehicles provides a foundation for building a diversified portfolio tailored to your financial goals and risk tolerance. As you gain experience, you can refine your strategy and explore additional investment options that align with your evolving investment objectives.

Choose the right brokerage

As the platform through which you buy and sell stocks, manage your portfolio, and access research tools, selecting the right brokerage is a pivotal decision that significantly influences your investing experience.

But this is a market rife with options, so its critical to weigh up factors such as transaction costs, user interface, educational resources and the capacity for mobile trading.

TradingPlatforms recommends eToro as a great all-rounder for beginner and experienced investors.

Top growth stocks to buy in 2023

Growth stocks are shares in companies expected to have above-average earnings growth compared to other firms. Investors gravitate toward these stocks for the potential of significant capital appreciation.

While inherently riskier due to volatility, successful investments in growth stocks can lead to substantial gains, attracting those with a risk-tolerant investment approach.

Here are some of our top growth stocks to buy in 2023.

Apple (AAPL)

While growth stocks often come in the form of fresh, disruptive companies, Apple continues to epitomize this category, having tripled its earnings per share (EPS) since 2016 and seen share price increases of more than 200%.

The Silicon Valley giant also stood alone among rivals Amazon, Alphabet, Meta and Microsoft in not falling short of analysts’ revenue projections in 2022.

However, with the outlook for the holiday quarter looking relatively weak, and share prices coming at a premium ($189), opportunistic investors may wish to look elsewhere.

T-Mobile US (TMUS)

One of the Unites States’ foremost cell service providers, T-Mobile has seen exponential growth in recent years. This is captured neatly by its stock market performance – the firm listed on the NASDAQ in 2019 at $75 per share, and has since doubled, sitting at $149 at the time of writing.

The firm also looks poised for strong growth in the coming years, with analysts predicting at least a 255% year over year EPS increase in 2023, and 35% in earnings growth in 2024.

In addition, there is a good chance of T-Mobile stock breaking the $150 barrier before the end of 2023. As part of a recent merger deal with fellow telecommunications firm Sprint, parent company Softbank relinquished 48.8 million T-Mobile shares that were rightfully theirs. The return of these shares to Softbank by T-Mobile is contingent upon the stock price remaining above $150 for 45 days before December 31, 2025. It is likely then, that many people are selling shares once they break that barrier.

Abercrombie & Fitch (ANF)

Speciality clothes retailer Abercrombie & Fitch has bounced back emphatically after years of slowed growth, and is having an exceptional year. The firm’s share price is up more than 200% since January, and currently sits at its highest value since 2011.

This can largely be attributed to significant financial overachievement, with the retailer achieving a profit margin of 9.6% in Q2, nearly doubling expectations. Similarly, Q3 figures saw the company outperform expectations, earning $1.06bn versus $981m expected.

In Q4, Abercrombie & Fitch expects its net sales growth to reach double digits, and is projecting an operating margin of at least 12%, versus the 7.7% achieved during the same period in 2022.

Top value stocks to buy in 2023

Value stocks represent shares in companies perceived to be undervalued by the market, often trading below their intrinsic worth. Investors in value stocks seek potential returns as the market corrects its pricing oversight.

Value investing is favored for its patient, disciplined approach, making it an attractive strategy for investors aiming for long-term growth and income with a lower risk profile.

Here are some of our top value stocks to buy in 2023.

NIO (NIO)

NIO is a burgeoning competitor in China’s rapidly expanding electric vehicle (EV) market. Its growth pales in comparison to market leaders such as Tesla and BYD, however the firm has said that it expects up to 80% yearly growth for vehicles delivered in Q3 2023.

The automaker has also revealed ambitious expansion plans, including two new sub-brands targeting lower cost markets in Europe, and the development of its innovative battery-swapping technology.

At a little over $7 a share, NIO could be the ideal choice for an investor seeking low risk and high reward.

Toyota Motor Corp (TM)

Toyota has enjoyed another year of success despite already being the world’s largest automaker. Its stock is up 38% since the beginning of 2023, owing partly to the growing popularity of hybrid vehicles in North America.

As a result, the automaker has forecasted $291bn in revenue for FY23 – a 13% uptick from previous projections.

Despite this, Toyota stock is still trading at 10 times below its earnings, making it a potentially excellent value stock in 2023.

Amazon (AMZN)

With a market capitalization of nearly $1.5tr, e-commerce giant Amazon is one of the largest and most successful businesses in the world today.

And it many ways, it still qualifies as a growth stock, with net income more than tripling in Q3 2023. Moreover, this impressive growth looks set to continue, with Amazon comfortably leading the cloud infrastructure market with AWS. The firm also looks poised to be a beneficiary of the modern era’s AI boom.

Despite this, the failure to match the productivity levels of the pandemic-era boom, coupled with creeping tax and regulatory concerns, has rendered Amazon’s stock price about even with its summer 2020 level. Based on this, Amazon stock is arguably highly undervalued in 2023