How to Buy Shares in a Bank

Stock shares are shares of ownership in a company.

Investors buy stock shares in public companies to share in the ownership of those companies and participate in the profit those companies make. Many banks are public companies There are several types of banks--from small, regional banks with only a few offices to national banks with thousands of branches and several different business lines from investment brokerages to insurance providers. Buying shares in a bank without understanding the bank's business is dangerous. Know your goals for investing in bank stocks when you decide which type of bank stock to invest in.

Step 1

Determine your goals for your bank stock investment. Do you want to buy shares in a rapidly growing bank and sell the shares for a profit when the share price grows? Do you want income from dividend payments from a bank that grows slowly but whose share price doesn't fall when the market falls? Write your goals on a piece of paper to refer to when you research bank stocks.

Step 2

Use free investing websites, magazine and newspaper articles and investing books to learn about banks and bank stocks. Learn about the differences between regional and national banks. Learn the names of small banks that are growing quickly. Learn the names of mid-sized banks that are acquiring other banks. Learn the names of large banks that are growing slowly but that are stable in good and bad economic times.

Step 3

Find out whether each bank on your list is a publicly traded company. Enter the bank's name in the Search field on free financial website and click the "Search" button. Look for a search result which shows the bank name and its stock symbol. For example, search for "Wells Fargo." Its stock symbol is WFC. Click the stock symbol to see a page with information about the bank's stock, such as its current price.

Step 4

Study recent news about the bank and ask yourself questions. Is the bank growing successfully? Is it paying dividends consistently and raising them regularly? Has business been hurt by economic problems? Does the bank have legal or other issues? Study opinions about the bank by stock analysts. Determine whether the analysts believe the bank's share price is reasonable for the bank's predicted growth. Determine whether the bank's stock meets your investing goals. Read investor forums such as Silicon Investor about each bank stock to determine what individual investors think about the stock.

Step 5

Make a final list of the stock symbols of the banks that meet your investing goals.

Step 6

Open a brokerage account with a brokerage or stock trading company. Use a search engine to find brokerage company websites. For example, search for "TD Ameritrade" or "Schwab." Access a brokerage company's website. Follow the directions and links to create a brokerage account. For example, for TD Ameritrade, click the "Open an Account" button.

Step 7

Follow the brokerage company's website directions to transfer money from your bank account to your brokerage account. This process often takes several days to complete. Transfer enough money from your bank account to cover the purchase of at least one share of the bank's stock, plus the brokerage company's trading commission.

Step 8

Follow the brokerage company's website directions or links to buy stock shares in the bank. For example, for TD Ameritrade, click the "Trade" menu tab, then click the "Stocks" sub-menu tab. Click the "Buy" button. Enter the number of shares you would like to buy. Do not enter more shares than the cash balance in your brokerage account will buy. Enter the stock symbol. For example, for Wells Fargo enter "WFC." Enter information about the type of trade you would like to place, or use the default values to place a "market order," a buy order which will be filled as soon as possible at the current market price or asking price. Click the button or link to place the order.

Step 9

Use the brokerage website's order status page to see when your buy order was filled and at what price. Refresh or reload the status page every few seconds or minutes until the order has been filled.

Tip

Several types of brokerage companies exist to meet the needs of several types of investors. Learn about different brokerage companies through investing information websites like The Motley Fool and through investing discussion forums to decide which brokerage company is right for your needs.

references & resources