How to buy your first share on the stock market? Last update on: 06/09/2021

Buy your first share on the stock market in three steps photo credit: Shutterstock

The Stock Exchange is attracting more and more interest from the general public. A growing number of individuals are taking the plunge and investing in listed companies. However, for neophytes, and especially the youngest investors, taking action is sometimes difficult, due to a lack of knowledge. Here are the three steps to follow to buy your first stock. And start his “career” as an investor.

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First step: open a securities account or a PEA (or both)

Before being able to buy a share on the stock market, you must open a securities account or an Equity Savings Plan (PEA). There is nothing complicated here: the procedure only takes a few days and can be done online at most brokers.

To open a PEA, you must be of legal age and no longer be attached to your parents' tax household. You must also make a first payment, which constitutes the act of opening your PEA. The minimum amount of this first payment varies according to the establishments, but rarely exceeds 100 euros.

To open a securities account, it is not necessary to be of legal age. With the consent of his parents, a minor is able to do so. In addition, he will not be asked for any minimum payment.

To have the possibility of buying shares outside the European zone, it is imperative to open a securities account. To minimize taxation on European securities, the PEA remains ideal. Therefore, from a fiscal and strategic point of view, it is recommended to open both.

To note

To open a PEA and/or a securities account, you must provide the financial institution with a copy of your identity document, proof of address less than three months old and a Bank Identity Statement (RIB). You must also complete a questionnaire called “MIF” (Markets of Financial Instruments) which assesses your financial skills and your experience in terms of investments.

Second step: identify an action

A listed share is identified by its name, its Isin code or its mnemonic code. You don't need to know all three to place a buy order. However, in order to avoid any error, it is recommended to go through the two aforementioned codes.

The Isin code is made up of twelve characters making it possible to identify all kinds of financial securities such as bonds, funds, trackers and therefore shares. The first two characters correspond to the country in which the company is headquartered (FR for France or US for the United States). They are followed by ten symbols (numbers and letters).

In France and the United States, the mnemonic code is a set of letters (usually three to five) evoking the name of the company (for example, GLE for Société Générale or TSLA for Tesla). In Asia, it is made up of numbers.

To know

Don't rush to buy your first stock. Take time for reflection. A stock portfolio is built over time, depending on opportunities, your convictions, the economic situation and the market climate.

Step Three: Place a Buy Order

Once an action has been identified, you must place the purchase order, which must include the following information:

After completing these items, the estimated brokerage fees and financial transaction tax (if applicable) is displayed. You can still confirm the order, modify it or cancel it. When confirmed, it is then transmitted to the market and appears in your order book. If it is executed, you will receive a notification by e-mail, containing all the data of your purchase and mentioning the costs. It appears under the “Executed” status in your order book.

To note

When you place an order, your broker or bank charges you brokerage fees. To optimize its added value, it is advisable to be vigilant about this cost. In general, online brokers and banks offer the most attractive conditions.

Different types of stock market orders are available. The most common is the limit price. For this type, you define a maximum price if it is a buy order (or a minimum price if it is a sell order). However, the requested quantity cannot be guaranteed.

Other orders make it possible to give priority to full execution (“market” order), to enter the best possible price (“best limit” order) or to operate according to a scenario (“threshold order”). range” or “trigger range”).

Individuals turn to the stock market and equities

The year 2020 was characterized by “a rise in power of individual shareholding”, as underlined by the Autorité des Marchés Financiers (AMF). In this particular period, marked by repeated confinements, many individuals have taken the time to take an interest in the stock market and the opportunities offered by the market. In the 1st quarter, the momentum remained very strong: 772,000 individuals carried out 18.2 million transactions in France on shares admitted to trading in Europe, a record level. Over the period, 70,000 new investors entered the markets. According to the AMF, they are “younger and more active” than average.