Have you ever thought about buying Amazon stock but weren‘t sure how to actually invest or what the best method is for your needs? Well friend, you’ve come to the right place!
In this detailed guide, I’ll be walking you through:
- Key background on Amazon – growth stats, financials
- Detailed comparisons of all the ways you can invest in Amazon
- Specific strategies tailored to different investor types
- Risk factors and steps to invest safely
- FAQs on Amazon stock
Let‘s get to it!
Overview – How Can You Invest in One of the World‘s Most Valuable Companies?
As a tech and ecommerce leader, Amazon is an extremely enticing investment opportunity:
- 5th highest market cap globally at over $878 billion
- Annual revenue has grown at a 31% CAGR since 2018
- 8x increase in shares outstanding after recent 20:1 stock split
- Prime member loyalty fuels recurring revenue
But how exactly can regular investors like you and me access this growth? Keep reading to understand various options to invest according to your means and strategy.
All About Amazon – Understanding Where They‘ve Been and Where They‘re Going
Let‘s first understand what makes Amazon such a corporate juggernaut…
Amazon‘s Meteoric Rise Since 1994 IPO at $18 per Share
What started as an online bookstore has expanded into far more, including:
- World‘s largest online marketplace with global physical and digital reach
- Market leader in cloud via Amazon Web Services (AWS)
- Online entertainment and streaming with Prime video/music
After its founding and 1997 public listing at $18 per adjusted share, Amazon has demonstrated incredible value appreciation for early and patient shareholders:
| Year | Adjusted Stock Price* |
|---|---|
| IPO (1997) | $0.075 ($18) |
| Recent high (July 2022) | $142 |
| All-time return | 1,886,567% |
*Adjusted for four stock splits over the years – data as of January 2023
This massive return was fueled by consistent above-average revenue growth:
Data source: Macrotrends
Driving this growth is Amazon‘s firm entrenchment across several key domains:
- Ecommerce – 44% market share in the US as of 2021. Prime membership drives repeat purchases.
- Cloud – Over 30% global cloud infrastructure market share with higher margins vs. retail.
- Digital media – 200 million Prime members stream TV shows and movies.
While mired in the current post-pandemic economic challenges, Amazon is poised for robust going forward expansion. This potential continues makes the stock an appealing long-term buy.
Now that you‘ve seen Amazon‘s impressive history and prospects…
How Can You Actually Buy Amazon Shares?
Despite the high headline share price, regular investors like us can still invest in Amazon. Let‘s explore the options:
1. Online Brokerages Offer Direct Control and Flexibility
The most popular way is simply using an online brokerage account to buy shares under AMZN:
Benefits
- Trade Amazon and other stocks/ETFs from one account
- Tailor trading strategy and schedule
- Access advanced research/analysis
- Tax optimization tools
However, costs and capabilities vary widely across leading platforms:
| Broker | Commissions | Platform | Minimum to Open |
|---|---|---|---|
| Fidelity | $0 | Advanced | $0 |
| TD Ameritrade | $0 | Intermediate | $0 |
| E*Trade | $0 | Intermediate | $500 |
Based on features and pricing, Fidelity and TD Ameritrade are best for DIY stock investing.
"I use Fidelity to buy Amazon shares every month. The zero fees and powerful desktop/mobile apps provide easy access to research and execution."
2. Fractional Shares Allow You to Buy Pieces of AMZN
Can‘t afford whole shares at over $100 a piece? Fractional share investing lets you buy portions:
- Invest fixed dollar amounts into Amazon vs. share amounts
- Build position over time in dollar cost averaging manner
- Take advantage of upside exactly proportional to owned fraction
Select brokers like Fidelity provide fractional investing. This democratizes Amazon access to any budget.
"I automate $20 weekly into fractional Amazon shares through Fidelity. Small consistent investments add up over 5-10 years to create wealth!"
3. index ETFs Offer Diversified Exposure
Rather than direct AMZN purchases, Exchange Traded Funds benchmarked to indexes provide indirect exposure:
- ETFs own baskets of stocks matching index constituents
- Top ETFs like VOO and VTI have 4%+ Amazon allocation
- Benefits: diversification, low costs, fractional shares
For example, $10,000 could buy units in Vanguard‘s S&P 500 ETF (VOO) which covers the 500 largest US companies. So while not exclusively invested in Amazon, VOO will closely mirror AMZN‘s performance as part of the overall index.
Index ETF investing is simpler and less risky than buying individual companies.
"I invest in VTI which covers the entire US stock market. A portion tracks Amazon without me needing to constantly follow the stock."
Now that you know how you can buy…
Expert Tips – Maximizing Returns and Managing Risk
While I‘ve presented various options to invest in Amazon, execute based on personalized factors:
Stock Investing Strategies
Dollar cost averaging – Invest fixed $ amounts monthly vs. large lump sums to smooth out volatility
Long term holding – Allow time for Amazon‘s durable advantages to compound over 5-10+ year periods
Diversification – Balance Amazon with other assets like index funds and bonds to minimize risk
Implementation Mechanisms
Brokerage account – Direct control but more effort. Use if closely tracking Amazon and markets.
Robo account – Automated passive investing if hands-off approach wanted. Underlying assets will have some AMZN exposure.
Retirement accounts – Perfect for young investors. Tax deferred growth over decades.
Analyze fees, account minimums, and platforms to pick right providers.
Know the Risks
Despite the positives, investing in any single stock like Amazon has risks to consider:
- Share prices fluctuate daily based on market whims, economy
- AMZN already down nearly 50% from its highs
- Future competition from retailers or cloud providers
- Potential tech regulations on data privacy, antitrust
Of course with smart strategies, these can be accounted for. But have realistic expectations when investing for the long run.
Now that you know how to invest safely and smartly…
Common Questions
Still have some queries? Let‘s go through the top few:
Who is currently Amazon‘s CEO?
Jeff Bezos resigned in 2021 after decades of leading the company. He was succeeded by former AWS head Andy Jassy.
Does Amazon pay dividends on its stock?
No, Amazon retains all profits to fuel aggressive reinvestment in growth initiatives. No dividends are paid to shareholders.
When did Amazon last split its stock? Why?
A 20:1 stock split took effect in June 2022. More affordable per share price allows more investors easier access.
Let me know if you have any other questions!
Start Investing in One of the World‘s Top Companies
You now have all the tools needed to invest in remarkable companies like Amazon.
Key takeaways:
✔️ Understand Amazon‘s business and growth history
✔️ Use online brokerages, ETFs, fractional shares to access AMZN
✔️ Dollar cost average and hold long-term
✔️ Mitigate risks via diversification and discipline
So don‘t delay – set up an investing account today to start profiting from Amazon‘s rise! Stay the course to achieve financial freedom.
