How to Buy Microsoft Stock: Best Ways to Invest in MSFT Shares

Artificial intelligence is all the craze these days, but top AI companies like OpenAI tend to be private or otherwise restricted to retail traders. That’s why many are turning to Microsoft (MSFT) – one of OpenAI’s partners – as an alternative.

Better yet, Microsoft stock offers growth potential, but it’s been around long enough to have a firm market position and overall stability, preventing excessive volatility from trashing your portfolio.

If you believe MSFT is right for you and want to know how to invest in Microsoft stock, we’ll cover the details of smart MSFT investing and how to approach a trading plan.

Table of Contents Table of Contents

1. Key Takeaways
2. How to Buy Microsoft Stock: A Step-By-Step Guide
3. How to Sell Microsoft Stock
4. How to Invest in Microsoft Stock through Investment Funds
5. Microsoft Stock Splits & How They Affect Investors
6. Microsoft Dividends
7. The Bottom Line: Should I Buy Microsoft Stock?
8. FAQs
9. References

Show Full Guide

Table of Contents

1. Key Takeaways
2. How to Buy Microsoft Stock: A Step-By-Step Guide
3. How to Sell Microsoft Stock
Show Full Guide
4. How to Invest in Microsoft Stock through Investment Funds
5. Microsoft Stock Splits & How They Affect Investors
6. Microsoft Dividends
7. The Bottom Line: Should I Buy Microsoft Stock?
8. FAQs
9. References

How to Buy Microsoft Stock: A Step-By-Step Guide

Luckily, large-cap blue-chip stocks like Microsoft don’t have accessibility issues.

Microsoft shares tend to be one of the most popular stocks to buy, both in terms of access (I’d be surprised if any reputable brokerage didn’t offer the option to buy Microsoft stock) and sheer tradability since plenty of buyers and sellers are happy to actively trade and keep the stock’s buy/ask spread tight.

As with any stock, though, following proper sequencing and steps when starting your Microsoft investment ensures you’re making a correct, well-informed decision.

Here’s how to buy Microsoft stock with as little hassle as possible:

1. Conduct Your Analysis

Due diligence is the first step toward any effective investment strategy. Should I buy Microsoft stock? Proper analysis will help you decide.

Before examining Microsoft specifically, it’s helpful to reflect on your overall investment circumstances, as these drive your investment strategy.

If you’re comfortable moving forward with your Microsoft investment, you’ll want to tackle due diligence from two angles: industry and operations, as well as financials and fundamentals.

First, research Microsoft’s industry and pay particularly close attention to current and emerging trends. For example, artificial intelligence is today’s hot topic, and Microsoft is at the center of that conversation, mainly because of its strategic investment and partnership with OpenAI.

Still, though they’re a major player today, look beyond the status quo and try to determine competitive risks, potential supply chain disruptions, legal concerns, and other factors that could hamper Microsoft’s current operational position.

Next, examine Microsoft’s financials and metrics to determine its health and whether the stock is reasonably priced.

Ultimately, most investors tend to use a blended approach to due diligence, which is fine – as long as you do a detailed analysis and understand what you’re researching and why.

2. Decide on a Budget

Based on the current Microsoft stock price, how many shares can you afford? How much does it cost to buy Microsoft stock altogether?

Many brokerages allow fractional trading, which means you can buy portions of a whole share, usually for as low as $5. Today, $5 worth of MSFT stock is about 0.01 shares – but we all have to start somewhere.

With fractional investing, it’s less a matter of how many shares you can afford and more a matter of how much of your overall portfolio you’re willing to allocate to MSFT. Most experts recommend investing 5%–10% in single blue-chip stocks like Microsoft (and generally no more than 2% of your total portfolio’s value in small-cap or more speculative offerings).

Remember also that if you hold many major market index mutual funds or ETFs, like SPY, you’re also holding MSFT – ensure that your total allocation reflects any market fund holdings. For example, MSFT makes up about 7% of one SPY share in this case.

3. Open a Brokerage Account

If your first investment is Microsoft and you don’t yet have a brokerage account, you have a little more work to do. Today, plenty of brokerage options exist tailor-made for retail traders, but you’ll still need to do some extra due diligence to ensure it’s right for you. Some questions to consider include:

Consider sticking with prominent names when selecting a brokerage, like Fidelity, Schwab, Robinhood, and Vanguard.

Your options also vary depending on your geographic location, so be sure to pick one that’s authorized to operate in your country, too.

4. Buy Microsoft Stock

Once your brokerage account is open, buying stock in Microsoft becomes easy.

• Log into your platform
• Find the MSFT symbol, and
• Place an order.

Though MSFT is a liquid stock with a tight bid/ask spread, placing a limit order (rather than a market order) is the best way to ensure you’re paying exactly what you want for shares and no more.

5. Track Your MSFT Investment’s Performance

Though you should avoid obsessively searching for Microsoft news, you should check on your holdings occasionally to see how it performs.

Try to resist the temptation to buy and sell the news, though – if you’re in the for the long run, time in the market beats timing the market. This means that, over the long run, simply holding the stock might be better than buying at pricing lows and selling at highs.

Depending on your country of residence, trying to time the market by actively buying and selling may have unfavorable tax implications, eating into profits even if successful.

You can also sign up for news alerts from the Microsoft Investor Relations Center and get up-to-date SEC filings, press releases, and investor presentations for an inside scoop on what’s happening with Microsoft. Doing so is also a great way to learn about stock fundamentals and what moves markets.

How to Sell Microsoft Stock

You’ll likely sell your Microsoft stock like you bought via your brokerage. In this case, ensure you use limit orders to get the best execution price and not sell yourself short.

Also, when checking the price before planning to sell, make sure you’re looking at accurate information – prices might swing wildly outside of market hours (9:30 AM to 4:00 PM EST), and Microsoft after-hours pricing or MSFT premarket share costs may be inaccurate and quite different from where it trades during the live session.

How to Invest in Microsoft Stock through Investment Funds

Investment funds (including mutual and exchange-traded funds) often hold Microsoft stock, whether as part of an active portfolio or a passive, index-based fund.

Some are riskier than others, like ETFs seeking leveraged returns on MSFT’s performance, whereas those including Microsoft as part of a larger pool of stocks tend to be more stable.

As of June 6, 2024, 532 ETFs hold MSFT shares.

Top 10 ETFs Holding MSFT Stock

Source: ETF.com

Microsoft Stock Splits & How They Affect Investors

Though fractional trading makes per-share pricing accessible to most investors, sometimes, the price gets steeper than company management prefers; in these cases, the company executes a stock split, wherein they divide one share into several.

It doesn’t affect the value of your investment, but sometimes, shares surge on the news of a stock split as it’s seen as a bullish indicator if management thinks the stock price is too high.

Will MSFT split any time soon? It’s possible but unlikely. Microsoft’s stock split history shows nine events, but there hasn’t been a stock split since 2003. Management seems pleased to be trading in the mid-triple digit range.

Microsoft Dividends

Tech stocks tend to throw all extra profit and earnings into growth and expansion, leaving little room for buybacks or dividends.

Microsoft, though, is mature enough to offer dividends. The company’s current dividend yield is a modest 0.70%.

Still, dividend reinvesting is an easy way to accelerate your gains. Over the past five years, as of June 6, 2024, MSFT shares grew 242%, but gains climbed to 259% if you include dividends throughout the period.

The Bottom Line: Should I Buy Microsoft Stock?

Whether to buy MSFT stock depends on your unique investment criteria, timeline, and goals. Still, if you want to capture tech stock growth and upside while ensuring a bit more stability than riskier options, Microsoft could be worth considering.

Microsoft offers exposure to the growing artificial intelligence sector. Still, its exploratory operations are built on a firm foundation of products like Microsoft Office that keep cash coming in. No company is recession-proof. Still, as of today, Microsoft’s offerings are so sufficiently entrenched in most of our daily lives that they face little direct competition.

Remember, though, that if you hold index funds, you likely already have some MSFT exposure. While adding more isn’t a bad idea, be sure not to let any single stock overwhelm the others in your portfolio unless it’s deliberately planned.

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