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JPMorgan Chase & Co. (JPM) is not only an old and historic name in banking, it is also one of the largest publicly traded financial stocks.
While it may not have the same level of influence it once wielded over the US financial system – by single-handedly bailing out the US Treasury, for example – it is still a corporation. extremely large financial services industry, with very large and sophisticated operations. There is virtually no segment of the US economy that JPMorgan does not touch in one way or another, making it an attractive investment for many investors.
And that’s without even mentioning its recent historic performance: it has increased by more than 70% in the last five years. If all of this prepares you for buying JPM stock, here’s what you need to know.
How to buy JP Morgan
1. Choose a brokerage
If you already have a broker that you use to buy and sell stocks, this step is pretty straightforward – you’ll probably just want to use your existing platform and go to step two or three.
If you don’t have a broker, research a few different online brokers and investment apps and consider your options carefully. Check the types of accounts offered by each platform, such as individual retirement accounts (IRAs) and general taxable investment accounts.
Depending on whether you’re saving for the long term or the very long term, one may be better for you than the other, as retirement accounts offer tax advantages. And if you’re saving for a child’s education, a tax-efficient 529 may be the answer. But keep in mind that these are less common at many other startup investment companies, so you might be better off going with a more established name.
Whichever company you decide to work with, you need to check the fees and costs associated with trading JPM and other stocks. Ideally, you want a brokerage that charges no trading fees and has little (if any) minimum balance requirements.
SoFi Automated Investing
SoFi Automated Investing
2. Evaluate JPMorgan’s finances
Before buying JPMorgan stock, take the time to review the company’s finances. This will help you determine if you are comfortable with how it is managed and the risks associated with its operations.
You can find information about the company’s finances, including Security and Exchange Commission (SEC) filings and other disclosures, at the company’s investor relations page or the SEC database. You can supplement this with the kind of information and research you can find from your broker or trusted third parties like Morningstar.
3. Determine how much you want to invest
Once you know you want to invest in JPMorgan stock, the next question is how much to buy. To decide, think about your overall finances and the role you want your stocks to play in your overall portfolio.
Do you have enough to cover your living expenses? How about an emergency fund? Are you saving enough for retirement?
If the answer is not yes to these questions, you may want to hold off on buying JP Morgan stock until you have consolidated your finances. But if so, you’re free to invest the difference in stocks like JPM and others.
As you move forward, you’ll also want to keep the JPM stock price in mind. Because it recently traded near $160 per share, you might want to buy what are called fractional shares so you can spread your money among several companies. If you are considering doing this, make sure your brokerage offers it, as not all do.
4. Determine your order type and place your order
To buy JPMorgan, you will need to log in to your investment account and place an order. You then need to decide what type of order you want.
For novice investors, there are two main types of orders to consider: market orders and limit orders.
With a market order, you buy shares regardless of the current market price when you enter your order.
A limit order, on the other hand, allows you to set the price you are willing to pay for the shares, and your order is only executed if the shares can be bought at the price you enter. This can be particularly useful for stocks that you expect to experience large price swings, perhaps even when you place your order and when it is executed.
5. Evaluate JPMorgan’s performance
After purchasing your JPM shares, be sure to keep an eye on the stock’s performance as well as any news regarding the company.
Stock prices change almost every second of the working day, and often also late at night and early in the morning. So you’ll want to avoid constantly monitoring it for peaks and troughs. Instead, check its percentage return over regular periods, say every six months or every year, to see how it compares to other similar stocks as well as broad market indices, like the S&P 500. .
You should also remember to monitor how its financials, like the documents you looked at when you first bought JPM, change and develop over time.
How to Sell JPMorgan Stock
As with all investments, inevitably the time has come for you to sell. To do this, simply log back into your investment account, enter the number of shares or dollar amount you want, and select a type of sell order.
Although this process is quite simple, there is one key thing to keep in mind: taxes. If you bought stocks in a normal investment account (i.e. something that isn’t tax-advantaged like an IRA or 429), you may very well have to pay taxes if you made a benefit.
If you’re looking at a substantial windfall, be sure to talk to a tax professional about how you can minimize the so-called capital gains taxes you may owe.
Other ways to invest in JPMorgan
Trading individual stocks is not for everyone. Because you’re focusing your money on the performance of just a few companies, it may require substantial research and risk tolerance to manage successfully.
This is why financial experts recommend that most people focus on index funds and exchange-traded funds (ETFs). These investment vehicles allow you to buy exposure to hundreds or thousands of companies with a single stock.
Fortunately, JPMorgan is incredibly easy to find in index funds. It is the 11th largest component of the S&P 500 by weight, after all. This means that in most S&P 500 index funds and ETFs, you will have just over 1% of each share devoted to JPM. If you prefer to take a little more exposure to JPMorgan in a diversified investment, you can also consider sector index funds.
Disclosure: The author owns stock in JPMorgan at the time of this writing.