How To Invest In Amazon – Investing in Amazon For Beginners 2021
If you’ve ever purchased pretty much anything online, you’ll likely have heard of e-commerce titan Amazon. After starting off as an online bookstore in 1994, it wasn’t long before Amazon founder Jeff Bezos saw the potential in expanding to a wider market. As they say, the rest is history, Amazon quickly became a household name and the largest online retailer in the world. In the past few years, Amazon has begun expanding into a myriad of industries, and if they can match even a fraction of their e-commerce success, Amazon will likely continue to grow. Throughout this guide, we’ll give you the run-down on some pros and cons to investing in Amazon and give you a detailed guide on exactly how you can get started.
#1 Broker to Invest in Amazon – eToro
How to Invest in Amazon – Step by Step Guide 2021
For anyone struggling to figure out how to invest in Amazon, we’ve created this handy guide to help you get started in under 5 minutes.
- Step 1: Open an eToro account: The first thing you’ll have to do is register with a broker. We recommend eToro. Just type “eToro.com” into your browser, press the “Join Now” button, and fill in the required details.
- Step 2: Verify your Identity: Because eToro is a regulated platform, you’ll need to verify your identity. All you’ll need to provide is a photo ID (passport, driving licence) and proof of address (utility bill, bank statement).
- Step 3: Fund your account: Once your account is verified you’ll need to fund it. Just click on “Deposit Funds” enter the amount you want to invest and press “Deposit”.
- Step 4: Invest in Amazon: That’s it! You’re ready to invest, just type “Amazon” into the search bar, press “Trade”, enter however much you’d like to invest, and press “Buy”.
Where to Invest in Amazon – Choose a Broker
With all the options available it can be difficult to narrow it down to just one broker, luckily for you, we’ve done the research so you don’t have to! Below you’ll find our full-length reviews of the best platforms you can use to invest in Amazon.
1. eToro – Best Overall Way to Invest in Amazon
With over 17 million users, eToro is the largest platform on our list, since its release in 2007 eToro has become one of the go-to investment platforms for both beginners and experienced traders. They’ve achieved this by packing a whole heap of excellent features in one easy-to-understand package.
Security & Privacy
Security is always one of the key features every investor should look out for when choosing which brokerage matches your needs. eToro is regulated by the FCA & CySEC, meaning your money is as secure as possible and your data is well protected. In an effort to defend your data from any hackers trying to intercept it, eToro SSL encrypts any sensitive information you provide them. Users can also benefit from setting up 2FA, which acts as a last line of defense should your account get compromised.
Fees & Features
Hiding behind eToro’s simple interface is a huge amount of advanced trading features that would keep even the most advanced trader content. New users may be interested in CopyTrading, a way you can automatically mirror more experienced traders, creating a passive-income stream that requires minimal trading knowledge. For those with some previous trading experience, you’ll be happy to know eToro covers a range of markets including cryptocurrency, forex, and of course stocks, so you’re free to manage all your investments in one place. Additionally, eToro is a commission-free platform, meaning if you invest £1000 you’ll receive £1000.
|Fee Type||Fee Amount|
|Inactivity Fee||$10 (Monthly)|
- Simple interface
- SSL encryption
- Could benefit from MetaTrader support
67% of retail investor accounts lose money when trading CFDs with this provider.
2. Capital.com – Invest in Amazon CFDs
Despite not being around as long as the other platforms we’ve mentioned, Capital.com has taken the world of investments by storm. They offer a huge amount of trading guides, helping to educate new traders rather than throwing them in the deep-end right away. This has the benefit of creating better traders, which in turn invest more frequently.
Security & Privacy
An increasing number of platforms require you to share sensitive information online, while understandably a lot of people are hesitant to reveal personal data online, Capital.com upholds some of the best data protection practices out there. They’re fully compliant with PCI data security standards, which in short, means you don’t have to worry about your data going “missing” or being sold to the highest bidder. Additionally, UK-based customers are covered up to £85,000 by FDIC insurance, protecting users in the event of Capital.com being compromised. Oh, and did we mention, Capital.com is also regulated by the FCA and CySEC, meaning they’re subject to the same audits and strict rules as eToro.
Fees & Features
If the excellent security wasn’t enough for you, Capital.com provides users with some interesting features. Newer users can benefit hugely from the variety of guides available, they cover pretty much every area you could need, from the basics of trading to understanding different markets. Beginners are in a great position to start their trading journey off on a positive note, especially when used in conjunction with a practice account. Experienced traders shouldn’t feel left out, however, because Capital.com has full TradingView integration, allowing you to use advanced charting tools to plot out market movements. All in all, we’d say thanks to these features, Capital.com is definitely capable of keeping up with its slightly older counterparts.
- Practice Account
- FDIC insurance
- TradingView integration
- Great range of guides
- Limited to trading CFDs and stocks
- Track record far shorter than some competitors
76.72% of retail investor accounts lose money when trading spread bets and/or CFDs with this provider.
3. AvaTrade – Accessible Way to Invest in Amazon
The oldest platform on our list, AvaTrade, has managed to keep up with the competition for over 15-years. They haven’t managed this by offering lackluster service, AvaTrade provides their users a secure and refined platform to trade on. They allow users to invest in the most popular markets, so if you want to invest in any assets other than Amazon, you’re covered.
Security & Privacy
It’s evident that AvaTrade cares a great deal about their customer’s security and they’ve done well to improve on traditional security measures. They use 256-bit SSL encryption to reduce the risk of any digital attacker intercepting customer data. On top of this, AvaTrade customers can benefit from McAfee Secure integration, which obscures any identity documents or card details.
Fees & Features
AvaTrade has a clear focus on providing users with an accessible, streamlined trading experience. Users benefit from a commission-free fee structure that ensures you won’t lose any of your investment to hidden fees (just make sure to watch out for the inactivity fees). One area that AvaTrade excels at is ensuring customers aren’t left stuck or confused, they have a 24/7 dedicated phone line along with an email support team, reducing the chance of a customer losing out due to technical issues. Experienced traders with deep pockets should also feel right at home on AvaTrade, if you meet the requirements you can open up a professional trading account giving you access to increased leverage and a wider range of financial instruments. Users are also free to create an Islamic account, something not many platforms offer and definitely a step in the direction of making trading accessible for all.
|Fee Type||Fee Amount|
|Inactivity Fee||£50 after 3 months & £100 after 12 months|
- Professional trading account
- Islamic account
- Excellent support
- Steep inactivity fees
- Not available in certain countries
Your Capital is at Risk.
Invest in Amazon – Broker Price Comparison
Still undecided about which broker seems best for you? Well, worry-not, we included this useful table you can reference to help you make a decision.
|Broker||Commission||Deposit Fee||Withdrawal Fee||Inactivity Fee|
|eToro||0%||$0||$0||$10 monthly (after 12 months inactivity)|
|AvaTrade||0%||$0||$0||$50 after 3 months, $100 after 12 months|
What are the Different Ways to Invest in Amazon?
If you’re looking to invest in Amazon then it’s important to consider what options are available for you. When you’re new to investing, trying to understand the differences between each type of investment can be extremely confusing. You’re often faced with difficult-to-understand financial jargon and even if you decide how you want to invest, you’ll need to make sure the broker you’ve chosen supports that method. All of this can be disheartening to new investors, the technical aspect is always seen as somewhat of a barrier to entry for those without much experience. To help ease this struggle as much as possible we’ve broken down 3 of the main ways you can invest in Amazon, explaining them in easy-to-understand terms.
Stocks otherwise known as shares are a great way to invest in Amazon, they provide users an easy-to-understand way of investing that has huge long-term potential. When you invest in a share of Amazon, you’re buying a fraction of the company, meaning you’re technically a part-owner of Amazon. This means that investing in Amazon shares has a couple of unique benefits, the first of which is dividends. Passive income is the goal of many and can easily be achieved by investing in stocks, when you purchase enough of a certain company’s shares you can begin receiving dividend payments (typically quarterly or annually), a company’s way of passing some of its profits to investors. Another great benefit of investing in Amazon stocks is voting rights, similarly to dividends, you can also gain the option of voting in Amazon shareholder meetings, allowing you to help decide the future of the company. The amount of votes you get is directly linked to the number of shares you own.
CFDs (Contract For Difference)
A contract for difference or CFD for short is a way of investing in a company without buying any shares. Rather than purchasing a fraction of a company you speculate on if the share price will increase or decrease, earning a profit if you get the direction correct. Because you don’t own any shares you won’t receive any of the benefits we mentioned earlier. Investing in an Amazon CFD is typically seen as riskier than stocks due to the potential for a trade to be liquidated and greater chances of an unfavourable outcome. However, with risk comes reward, CFDs can make you a lot of profit far quicker than stocks, with some people making thousands trading CFDs in just a day or two.
ETFs (Exchange-Traded Fund)
The final way of investing in Amazon that we’ll discuss are ETFs, often referred to as exchange-traded funds. An ETF is a type of fund created by a brokerage or fund manager that allows you to invest in a variety of companies without having to do all the legwork you otherwise would. The main difference between an ETF and stocks is despite investing in a group of companies, you don’t own any shares, simply a portion of the fund that owns them. Because of this, even though you can still receive dividend payments (if the fund passes them on), you won’t have any voting rights.
Best Ways to Invest in Amazon UK
Now that you understand the differences between the 3 most common types of investment, it’s time to delve into who can best benefit from them. The right investment for you will depend on your individual needs and investment strategy, although an easy way to think about it is by the length of time you plan on investing.
Invest in Amazon Stocks
Do you believe in the long-term potential of Amazon? If so, investing in Amazon stocks could be perfect for you. Typically seen as the simplest type of investment, stocks are an excellent option if you want to take a mostly hands-free approach to investing. A company’s share price is directly linked to its performance (amongst other things) so if you think a company is likely to continue doing well investing in stocks is fairly risk-free, that being said if the company has a bad year you will be left out of pocket. Dividends can also provide an excellent opportunity to earn a passive income while investing, if you’re cash-strapped a dividend payment could save you from having to sell off a portion of your investment.
Invest in an Amazon CFD
Long-term investments aren’t everyone’s cup of tea, some prefer short investments only lasting a couple of days. If this sounds like you, investing in a CFD could be exactly what you’re looking for. When investing in a CFD you’re not buying anything, this provides you with greater liquidity than the other ways of investing we mentioned. Typically, with CFDs, you have a greater chance of “getting rich quick”, although if you don’t position yourself carefully you can end up losing more than you initially invested. For any risky traders, this is by far the best method because it has a much greater risk to reward ratio.
Invest in an Amazon ETF
Stocks and CFDs, not your thing? Luckily, we’ve got you covered. Investing in an Amazon ETF blends both concepts and bridges the gap between them. With an ETF you’re not tied to any specific stocks and the risk is generally far lower because you’re investing in a variety of companies, meaning should one suffer, the others in the fund should in theory balance it out, helping to mitigate any losses. Because there is a whole heap of ETFs that contain different companies it’s important to find out what percentage of the fund is Amazon stocks.
Is Amazon a Good Investment?
As one of the largest companies in the world, Amazon is generally regarded as a safe investment, perfect for those looking for a relatively stable place to park their cash. Amazon has been growing steadily over the past few years, posting a 3.9% increase in the last year and a 283% increase in the last 5. With numbers like this, it’s no wonder that so many are looking to invest in Amazon before they have their next big leg up.
E-Commerce is Booming
If there’s one industry that has had an incredible decade, it’s most certainly e-commerce. Think back 10-15 years ago, buying things online although not unheard of was regarded as being unsafe and insecure. However, In 2020 a huge 87% of UK households made an online purchase, meaning those that haven’t are now in the minority. It’s just more convenient to purchase things from the comfort of your own home, there are no queues, no walking about, and it takes a fraction of the time, so why wouldn’t you shop online? As the e-commerce sector continues to grow, the largest online retailer Amazon is set to follow, and with the rate at which the industry is growing, the next 5 years are set to be exceptionally exciting.
As one of the largest companies in the world, it makes sense that Amazon would leverage its name and resources to branch out into other sectors. Currently, Amazon has a finger in cloud computing, server hosting, smart home technology, audiobooks, streaming, and of course e-commerce. If you ask us, that’s quite the diversified list of offerings, branching out like this will prevent Amazon from losing out if one sector takes a hit, while simultaneously bagging them new customers. Cloud computing and streaming are both sectors set to increase massively over the next few years, potentially priming Amazon to dominate these industries as well.
Investing in Amazon – What are the Risks
Although the largest online retailer in the world, investing in Amazon is not without risk. In recent times Amazon has been struggling to maintain the same rate of growth as previous years, likely because they’ve already secured a large portion of the customers out there. Additionally, unrealistic expectations from investors and increased scrutiny over the welfare of workers could end up being catastrophic for anyone invested in Amazon.
Not Meeting Expectations
Since its launch in 1994 Amazon has been consistently exceeding investors’ expectations. While on the surface this sounds like it would be a good thing, the unfortunate reality is this simply leads to further increased expectations. While this isn’t a surprise, it does put Amazon in a sticky position. They’ve grown to be one of the largest companies in the world, but have to continue growing at a similar rate or fear losing investors. If Amazon has a bad year or isn’t able to meet investor targets, it would shake confidence in the company. This would lead investors to think Amazon is no longer safe and leave many investors looking for an alternative.
Despite Amazon’s best attempts to keep you thinking otherwise, it’s been well documented that their employees (particularly drivers and warehouse operatives) are subject to poor working conditions and unrealistic expectations. This has led many to boycott Amazon and call for the company to take better care of its workers. Take for example, in 2020 workers were protesting unsafe working conditions during the pandemic, leading to Amazon firing at least 6 workers, causing a storm of media backlash. While a little bit of bad publicity won’t affect Amazon in the long-term, if changes aren’t made soon it has the potential to spiral out of control.
How to Invest in Amazon with eToro
Getting started on a new investment platform can be a tall order, it can be difficult to navigate the website, hard to understand the fee structures, and impossible to divide which broker is right for you. We created this comprehensive guide on how you can get started on our top Amazon investment platform, eToro.
Step 1: Open an account with eToro
If you want to invest in Amazon, then the first thing you’ll need to do is register with a trusted broker. For this, we recommend eToro because they offer users a phenomenal blend of security, advanced trading features, and an easy-to-understand fee structure. Just type “eToro.com” into your browser, press “Join Now” and fill in the necessary details.
67% of retail investor accounts lose money when trading CFDs with this provider.
Step 2: Verify your account
Before you start trading you’ll need to verify your account, this is because eToro is a regulated platform, meaning they comply with strict data protection and money laundering rules. It’s not hard to verify your account, all you’ll need to do is provide a photo ID (passport, driving licence) and proof of address (bank statement, utility bill).
Step 3: Fund your account
After you’ve verified your account, you’ll need to fund it. eToro makes this as simple as can be. Just click on “Deposit Funds”, enter however much you want to invest, and press “Deposit”. eToro has a range of payment methods available, including credit/debit cards, e-wallet (PayPal, Skrill, etc), and bank transfer.
Step 4: Invest in Amazon!
Once you’ve funded your account you’re ready to invest in Amazon! Just type “Amazon” into the eToro search bar, press “Trade”, enter the amount you’d like to invest, and press “buy”. There you have it, now you’re an Amazon investor!
Now that you’ve reached the end of our guide you’ll be equipped with all the knowledge you could need regarding investing in Amazon! We’ve discussed the best brokers to invest in Amazon, some advantages and disadvantages to investing, and provided a detailed guide on how you can start investing in just a few short minutes. If you’re still undecided on which platform is best for you to start investing with, we have a recommendation for you. After analysing security, ease of use, and quality of features, we concluded there was one clear victor, eToro. There you have it, we’ve at the end of the guide, we hope you enjoyed it. If you’re still undecided on if Amazon is the right investment for you, it might be worth your time taking a look at one of our other articles. Thanks for reading.