How to Buy Defensive Stocks – 5 Best Defensive Stocks To Buy Now
Is this your first time hearing about defensive stocks? Don’t worry, you’re not alone. People often mistake this class of stocks with ‘Defense stocks; however, the difference between them is pretty glaring. Defensive stocks are a class of stocks that comprises companies that deal in ammunition and all forms of weaponry. On the other hand, Defensive stocks are a distinct class of company stocks that offer the highest quality of stability over their investment. They are the best companies in their industry, and thus, it is almost certain that their stocks will yield substantial dividends.
In this article, we will be looking at the best defensive stocks available and the best brokers in the market to help you maximize your profit.
eToro- #1 Platform to Buy Defensive Stocks
How to Buy Defensive Stocks With eToro – Step by Step Guide 2021
eToro is the leading broker where users can find solace and invest in their choice assets to obtain maximum profits. Here are a few easy steps to become registered with eToro:
- Step 1: Open an account: You already understand that you would need to open a viable account with eToro. Do this by visiting eToro’s official website and clicking ‘JOIN NOW’ at the top righthand corner of your screen.
- Step 2: Provide your unique account details: Enter details such as your email, ‘username,’ and ‘password.’ Be sure to fill in the correct information and use a password/username that you can easily remember and your active email.
- Step 3: ID verification: Verify your identity using a standard photo ID such as on a license to help confirm that the details you input are correct. Use a passport or a driving license along with a document that affirms your geographical location and your name.
- Step 4: Deposit Funds: The next step would be to begin trading on the platform. Select the ‘Deposit funds’ function and select deposit. Choose your preferred payment methods
Where to Buy defensive stocks – The best brokers
Defensive stocks belong to some of the biggest companies in the world, and as their pedigrees may demand, they may tend to be unavailable for trading as real stocks on most brokerage platforms. Their exclusiveness makes them not easily accessible to the stocks. So, how can investors buy some of these stocks? It all depends on the type of brokerage services you choose to use. Not all brokers can allow you to purchase Defensive stocks. Hence you will have to conduct thorough research into the best brokers in the market that have these stocks enlisted on their platform. The choice of brokers is not an easy one, and that’s why we have made it easy for you. Below is a detailed analysis of three brokers that offer you options to invest in defensive stocks
1. eToro – Best Overall Option to invest in Defensive Stocks
eToro has become a leader in the world of investment brokers, and it continues to defy gravity in its accomplishments. Since it was established in 2007, the platform has advanced gradually to offer new-age investors a system that gives them the latest and the best stock options, CFDs, ETFs, and cryptocurrencies. It has over 20 million active users who have remained loyal for several reasons, such as its low trading fees, user-friendly interface, and copy trading features which have invested a worthwhile journey for them.
Security and Privacy
Due regulations according to set laws are necessary to keep any investment broker afloat. Any investment broker that is just starting will secure the required license from regulatory organizations to prove it’s legitimacy to prospective customers. Given the track record of eToro and the vast number of countries in which they have gained users, eToro is licensed by top regulatory bodies such as CySEC, the FCA, and the ASIC. It offers high security and a safe platform where users can invest with confidence. All account holders are eligible for a 2FA system that acts as a defense against unwanted access by third-party agents. It preserves the funds and the personal details that users might have provided when they signed up on the platform. eToro has been certified to operate in many countries of the world. It has done well over time, given the platform’s ability to accommodate many users at a go and not lead to any technical challenges with the smooth running of the forum.
Fees and Features
Beginners will find the eToro app and website a delight, given the plethora of options it offers in a simple structure and design. Copy trading is one of the key features that gives due credit to the impressive work done to bring eToro to the position of a leading broker. A new user may open an account today and make a deposit and still participate in copy trading without any formal knowledge about the intricacies of eToro. While imitating the trading habits of more experienced traders, they are bound to pick up on the tricks and techniques of professional traders at their own pace. eToro also offers a demo account feature that enables users to practice different trading strategies, especially for navigating the high-risk CFD markets.
|Fee Type||Fee Amount|
|Inactivity Fee||£10 per month|
- User interactive platform
- Offers negative balance protection
- A low minimum deposit fee
- High security
- Access to 1000+ stocks
- Charges inactivity fee
- No Meta trader support
67% of retail investor accounts lose money when trading CFDs with this provider.
2. AvaTrade- Buy Defensive stocks with Ease
AvaTrade is the second-best broker and, technically, an excellent alternative to eToro. The platform offers an easy-to-use application that, interestingly, can aid users in investing in their choice assets seamlessly from the comfort of their homes. It has grown to accommodate more than a quarter of a million active traders, and it opened its doors to institutional investors from the Middle East.
Security and Privacy
AvaTrade is a unique place where you can trade without restrictions in countries where AvaTrade has been licensed to operate by their top regulatory body. Prioritizing user preferences for security and privacy, AvaTrade offers a functional 256-bit SSL data encryption protocol to offer a backlog of support for all accumulated data from the user’s interaction with the underlying programming. It is indeed one of the platforms where investors feel quickly at home without fear of hackers unless they reveal the security details of their accounts which could compromise the security measures put in place for customer protection. To forestall this, AvaTrade effectively educates its users on taking adequate care of their holdings and keeping their passwords and unique details secret.
Fees and Features
AvaTrade offers one of the most affordable charges over virtually all trading options. Investors can trade stocks, CFDs, ETFs, and cryptocurrencies. It is commission-free, this giving users total value for what they hold. There are also no random deductions on the platform unless required over specific markets, especially cryptocurrencies. Users can deploy several payment options for funding their Avago accounts via PayPal, debit cards, credit cards, bank transfers, among other viable options. AvaTrade also has a demo account to accommodate newbie traders and help them acclimate to a simulation of the actual market situation.
|Fee Type||Fee Amount|
|Inactivity Fee||£50 after three months and £100 after 12 months|
- Highly regulated platform
- 24/7 email and phone support
- Islamic account is available to accommodate more users
- Demo account
- No negative balance protection
- No guaranteed stop loss
- High inactivity fee
Your Capital is at Risk.
3. Capital.com- Great Platform to Buy Defensive Stocks
If you are looking to take your first steps as a trader/investor in stocks, CFDs and ETFs, this broker is a great place to start. Built to fast track the development of traders across over 4000 markets, the broker has made a name for itself for the vast opportunities it offers to new and existing users.
Security and Privacy measures
Data protection is a top priority Capital.com as part of strict adherence to the referendum by the United Kingdom requiring digital platforms to create a safe and secure platform for UK citizens especially. Hence, it is unsurprising that there are certain benefits to using Capital.com peculiar to registered users from the United Kingdom. Aside from the encryption system of the app, they offer FDIC insurance that only users from the UK can benefit from in the event of a data breach that leads to the loss of capital by users. They are also licensed by top regulatory bodies, e.g. Cyprus securities and exchange commission, the United Kingdom’s top financial regulatory body, FCA, the ASIC, and the FSCA. The total security protocol may not be 100% efficient as the only danger to a user account may be the users themselves. Hence, all users are implored to keep their account details safe and away from prying eyes. Capital.com is not liable for any loss of funds caused by the users’ mishandling of user account details.
Fees and Features
Compared to both eToro and AvaTrade, Capital.com does not charge any fee over any trade on assets such as stocks, CFDs, and ETFs. Capital.com does not charge any commission fee, inactivity fee or withdrawal/deposit fee. Users can download the mobile app via iOS and Android devices and at the convenience of its users. They also offer the Copy Trading feature as part of the measures to enable users to trade any asset class with relative ease and without any technical knowledge of price movements.
|Fee Type||Fee Amount|
- Access to analytical charts
- FDIC Insurance (for UK-based traders)
- Low CFD fees
- Efficient customer support
- High risk on CFD tradings
- No price alerts
76.72% of retail investor accounts lose money when trading spread bets and/or CFDs with this provider.
Comparing the three brokers’ prices for trading Defensive stocks
Below is a summary of the fee required across each platform to invest in defensive stocks.
|Broker||Commission||Deposit Fee||Withdrawal Fee||Inactivity Fee|
|AvaTrade||0%||£0||£0||£50 after three months and £100 after 12 months|
What Are The Different Ways To Buy Defensive stocks?
In choosing a specific method of buying defensive stocks, certain conditions should form the basis of your decision. The plans are distinct and have pros and cons, but a choice will have to be made depending on your choice as an investor. Your decision will have to be based on three factors: how long you want to invest in, your risk tolerance, how much you intend to accumulate in profits over a specified period.
When you opt to buy company stocks, you are settling for a long-term but stable income stream over an extended period. Investors have to make informed decisions about what form of investment is the best at a particular time. If you are investing in a startup, the returns on investment in the form of dividends may not be immediate. It may take a few years before it can pay dividends. The significant benefit of buying a startup’s stocks is that you get to buy a considerable stale in the company due to its low valuation upon going public. You get to contribute a lot to relevant decisions about the management of the company as well. Buying stocks of established companies is a quick way to begin earning dividends periodically. You will be purchasing a stake in an already growing company with its network and sales funnels, and it is a ready-made cash bank. Dividends may be released to investors quarterly, annually, or bi-annually, depending on the company’s policies. How much you get to earn depends on how large your stake in the company.
CFDs (Contract for Difference)
While this option is available to all interested investors in a particular company stock via any brokerage, it is often used as an alternative to buying real stocks. CFDs offer users a chance to get involved with company stocks, albeit while not owning any stake in the company. Instead, you are more like a futures trader, making bets on the possible directions of the price action of a piece of company stocks. The essential requirement for trading CFDs is knowledge of technical analysis of price charts. Experienced traders are familiar with this skill as they can read the elements of a particular price chart and determine whether the price would decrease or increase to a pre-determined level. In order words, what trading CFDs entail is that you can analyze and predict which stock prices rise or fall over a certain period. Unlike trading stocks, it is not a long-term investment and is highly volatile.
ETFs (Exchange-Traded Funds)
If you have ever heard about mutual funds and bonds, you will understand the metrics of ETFs. ETFs are an investor’s best bet to create a well-diversified portfolio that will turn in substantial profits over time. The scope of trading ETFs of any stock is determined by the periodic changes in demand and supply. You buy a percentage share of a specific portion of a stock portfolio created by a broker or investment manager with ETFs. Mind you; you own a part of the entire fund and not the stocks themselves. You have to make an excellent broker or professional manager choice to offer you the best possible assets in a fund.
Best ways to Buy Defensive stocks
You are aware of the enormous potential of defensive stocks to generate a stable stream of earnings when you access them on a broker like eToro. We will be examining the three methods highlighted above in direct relation to defensive stocks since they are a peculiar set of company stocks.
Buy Defensive Stocks
Defensive stocks are some of the best stocks in any industry that tend to guarantee a steady stream of income due to the company’s stature. Most of the companies are some of the biggest names, and they pay investors well in the form of dividends. It is not a long-haul kind of stock as investors can get out of the market after earning substantial dividends from their shares. Buying direct defensive stocks comes with minimal risks compared to other forms of investment. Also, the chances of incurring a loss are much lower than with CFDs. The guarantee of profit places this class of stocks above other smaller company stocks. They are companies with peak performance, and their share value tends to fare well over time.
Buy Defensive stock CFDs
You can also trade defensive stock prices based on the price swings and leverage the changes to enrich your portfolio. CFDs offer a much quicker alternative to stocks to earn maximum profits. If you are unsure of your ability to deal with the risk factors involved in trading CFDs of defensive stocks, we recommend you stick with buying direct stocks. Despite the high risk, it offers higher income potential in the short term. It means that investors can take profits within a day or two following a trade. The liquidity potential is much higher than in buying regular stocks.
Buying Defensive stock ETFs
There are several options for buying defensive stock ETFs:
- You can opt for a diversified portfolio ETF derived from a significant stock exchange market such as the NYSE, NASDAQ, S&P 500, and the Dow Jones industrial average. The ETF will follow the pattern of the group of stocks on the market. In other words, it means that you own two or more defensive stocks within a particular fund that may contain other stocks belonging to different industries.
- The second option is a niche passive equity system. By this, we mean that you buy an ETF containing the same type of stocks. You can opt to invest in a fund that has majorly defensive stocks.
- You can opt for recommendations of the best defensive stock ETFs from your broker or investment manager to trust their judgment.
You can buy and earn profits from funds owned by investment brokers or market setups with minimal risks with any of these methods.
Are Defensive stocks a good investment choice?
Yes, indeed they are! What makes a defensive stock is the observed pattern of positive returns consistently, irrespective of the nature of the market. These stocks can withstand volatility over time, and despite all bearishness and uncertainties, they are sure to turn in profits for you. Their products are in high demand, and they are some of the world’s largest profit makers irrespective of the economy. While passing through changes in management and other critical business decisions, they are much more stable than other forms of stocks. They are a good investment choice as they can help protect investors’ capital even through recessions or periods of high volatility.
Some of these companies include: Coca Ca, Procter & Gamble, Philip Morris International, to mention but a few. These companies are evaluated to be the most consistent defensive stocks as they are well established and make profits from year to year. Their dividends provide an excellent cushion during a damaging market decline. CFD traders are also more liable to earn more profit than they experience losses due to the low volatility of these stocks.
Risks in buying defensive stocks
We know that defensive stocks offer a steady income stream even in the most bearish market situations. They are a stable set of stocks of value with very low volatility. Most analysts that these companies may pose little to no risk. But with stability and low volatility, there is the chance of the stocks turning in relatively low income over time. The gains in the market can be pretty small even for a CFD trader if the price doesn’t jump too often. A CFD trader can be almost comfortable trading, knowing that the risks are minimal.
How to Buy Defensive Stocks – Detailed & Explained in Full
Now that you know the methods you can deploy to buy defensive stocks, here is a walkthrough on how to buy defensive stocks with eToro:
Step 1: Register a broker’s account:
First, visit eToro’s website and proceed to click ‘Join now’ at the top righthand corner of the home page. Choose a unique username, password and enter your active email address.
Step 2: Verify your identity:
Verify your identity using a standard-issued photo ID such as your driver’s license to help confirm that the details you input are correct. You can either use a passport or a driving license along with a document that affirms your geographical location.
Step 3: Make a deposit:
Once identity verification has been verified, you can proceed to deposit funds into your account. The minimum deposit allowed on eToro is $50, and all transactions in USD are free. Other currencies attract at least 0.5% as a deposit fee. Payments made using e-payment methods like PayPal and debit or credit cards get approved instantly. If you want to buy defensive stocks instantly, it’s best to use a debit/credit card or an e-wallet like Paypal
Step 4: Search for Defensive stocks:
As soon as your deposit is visible in your wallet, you can now buy defensive stocks. Locate the search box at the top of the page and input the name of your preferred defensive stocks, for example, ‘Coca Cola.’ You can opt against using all your deposit but instead by using a certain amount of your deposits. Enter the rate of the stock and mention the amount in dollars and click ‘Open Trade.’ You have now opened bought a defensive stock at zero commission fee.
How to Buy Defensive Stocks – Conclusion
We have come to the end of our guide to buy defensive stocks; we hope you enjoyed the read. We have looked at what defensive stocks are, how to buy defensive stocks and the various platforms where you can buy defensive stocks. If you’re still unsure about what platform to use, we recommend eToro, it is the best platform for buying defensive stocks. You can quickly get started with eToro today with a minimum of $50 deposit and trade with zero commissions charged. If you are still unclear about eToro, kindly read through some of our other articles. Thanks for reading!