How to buy shares in Microsoft – Forbes Advisor Australia

0

Software giant Microsoft Corp. announced better-than-expected results for its third fiscal quarter which ended in March this year, dispelling some of the macro concerns weighing on the tech sector.

Quarterly sales and earnings beat analysts’ expectations, boosted by robust growth in demand for cloud services. Third-quarter revenue rose 18% to $49 billion, while earnings per share rose to $2.22 from $1.95 a year earlier.

For the forthcoming fourth quarter of FY22, the midpoint of the outlook suggests year-over-year revenue growth of 14%, earnings before interest and taxes (EBIT) of 11% and 5.6 % of net income.

Satya Nadella, chief executive of Microsoft, predicted that customer technology spending would remain buoyant even as general economic growth slows thanks to a combination of runaway inflation, rising interest rates and the potential for decline in IT spending after the pandemic.

Mr. Nadella said: “In the future, digital technology will be the key factor that fuels global economic output. Across the technology stack, we are expanding our opportunities and gaining (market) share by helping customers differentiate themselves, build resilience and do more with less.

Here’s what you need to know about buying and selling Microsoft stock.

Please note: investing in companies does not carry any guarantees. When buying shares of a company, it is possible to lose some, and very occasionally all, of your money. Past performance is no guarantee of future performance and this article is not intended as a recommendation of any kind.

Why own stocks?

Before buying shares in a company, ask yourself why you are making this decision. Does the company have great prospects with a stock price that could go from strength to strength?

Or are there talks of a looming takeover that could potentially boost a company’s stock price? Perhaps the company you identified is on a turnaround mission and its stock price is starting to recover from previous lows.

How to buy stocks

There are several steps to go through once you have made sure of the reasons for buying stock in a particular company.

1) Open an account

Whether you’re a seasoned stock trader or someone new to stock market investing, if you want to buy Microsoft stock, you’ll need to open an account with a regulated brokerage.

Brokerage is a competitive market these days and services for do-it-yourself investors come in many different guises – from online investment platforms run by some of the biggest names in financial services to more nimble investment trading apps that work on your smartphone or tablet.

Before opening an account, keep the following in mind:

  • Keep your ultimate financial goals in mind
  • Be prepared for the ups and downs of the stock market
  • Aim to keep trading costs to a minimum
  • Remember that investing in stocks may incur tax charges, for example, when selling part of your portfolio.

And before you buy stocks, ask yourself these questions:

  • Should I take financial advice?
  • Am I comfortable with the level of risk in question?
  • What is my investment budget?
  • Can I afford to lose money?
  • Do I understand the company I am looking to invest in?
  • Am I protected if my platform provider/advisor goes bankrupt?

2) Where is Microsoft marketed?

Microsoft’s stock symbol is MSFT and the company is listed on the Nasdaq market in the United States. Nasdaq trading hours are 9:30 p.m. to 4:00 p.m., Monday through Friday.

Check that you can buy US stocks through your brokerage account and watch for foreign transaction fees.

Under the US-Australia Double Taxation Agreement, there are specific tax rules governing income dividends.

Stock dividends are taxed in the United States. As a result, US corporations must withhold and remit 30% of stock dividends to the US Internal Revenue Service (IRS), which you may be able to reduce to 15% via your Australian tax return as part of compensation for foreign income tax (FITO).

However, as each case varies, it is worth speaking to a dedicated tax agent about what your personal financial situation is likely to be and the required forms that need to be completed.

3) Do your research

To learn more about Microsoft, go online and visit the company’s investor relations page.

4) What is your investment strategy?

People tend to invest in two ways: either with a lump sum purchase or through smaller, more stable amounts over time.

The latter method is often referred to as an “average dollar value” way, a stock market hack that can help you pay less per share on average over time. Rather than waiting to build up a lump sum, this means that an investor’s money is immediately used in the market.

5) Place an order

Once you’re ready to buy Microsoft stock, log into your investment account or trading app. Type in the symbol MSFT and the number of shares you want to buy, or the amount of money you are willing to invest.

6) Examine Microsoft’s performance

Whether your stock portfolio is full of companies or contains only a handful of stocks, it is essential that you regularly monitor the performance of each component: monthly, quarterly or annually.

This gives you the opportunity to review performance and ask if any adjustments to your holdings are needed – to maintain the status quo, buy more shares or sell existing shares.

How to sell stocks

If you are happy with the performance of your stocks and want to (hopefully) make a profit, there will come a time when you will want to sell your holdings. To do this, log in to your investment platform, enter the stock symbol and select the amount you want to sell.

If you have made an overall profit, you will be liable to pay Capital Gains Tax (CGT) in Australia when you sell your holdings. If you have owned the shareholders for less than 12 months, you will have to pay 100% of the value of your capital gain at your applicable income tax rate. Talk to your accountant.

However, if you have held the shares for more than 12 months, you will probably only have to pay 50% of the capital gain under Australia’s CGT discount rules.

How to invest in Microsoft through a fund

Investing directly in individual stocks can be an absorbing and hopefully profitable experience. It may also entitle you to shareholder benefits specific to the company in question.

However, investing directly in individual companies can leave you vulnerable to stock market volatility and unforeseen stock price fluctuations.

This is why financial experts recommend that most people invest in a diverse mix of asset classes and funds holding hundreds, if not thousands, of company stocks.

Being a major component of the Nasdaq index, Microsoft finds itself in many funds that incorporate a bias towards the United States.

Please note: investing in companies does not carry any guarantees. When buying shares of a company, it is possible to lose some, and very occasionally all, of your money. Past performance is no guarantee of future performance and this article is not intended as a recommendation of any kind.

Share.

Comments are closed.