Buy Retail Stocks – How To Buy Retail Stocks 2021

Fact Checked by Gary McFarlane

Retail stocks have long proved to be a profitable and safe investment choice. Investors prefer buying retail stocks as it lets them own some part of a business they buy from. 

As a retail investor, you may invest smaller amounts in a number of companies rather than big amounts in one. Moreover, you don’t have to be a big corporation to invest in retail stock. Anyone with a smaller investment budget can try their hand at retail investing, making it a highly accessible option for beginners. 

In this guide, we will cover everything you would need to know to buy retail stock. It will include a detailed explanation of buying the stock, the best brokers that will help you do it, and what will be the pros and cons of buying retail stock. 

#1 Broker to Buy Retail stocks – eToro

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How to buy retail stocks – step by step guide 2021

Buying retail stock entails investing in one or more than one company. If you are wondering where to begin with retail investing, don’t worry, we have you covered. We have compiled this quick guide to help you buy your first stock and a more detailed one at the bottom of the page. 

  • Step 1: Register yourself on eToro: To buy retail stock, you will first need to register yourself with a broker online. We recommend eToro. Simply head over to ‘eToro.com’, and click ‘join now’ to fill the required fields.
  • Step 2: Verify yourself: Once you create your account, you will need to verify your identity. This is for your own protection and it is an easy step as well. You will need to present a photo ID and address proof.
  • Step 3: Fund your account: After you have been verified, you will need to fund your account to be able to purchase stock. Think of it as putting money in your wallet to be able to go out and make a purchase.
  • Step 4: Invest in retail stock: You’re all set to buy a retail stock now. Simply type the name of the company you want to invest in, say, Amazon, in the search bar. Then press ‘trade’ with the amount you would want to purchase. Lastly, press ‘open trade’, and there you go. You have successfully purchased retail stock.

Where to buy retail stocks – Choose a Broker

Before you venture into the exciting world of trading stocks, you should take the time to choose a broker. Your broker is the platform through which you will navigate the market. It is important that you pick a top-quality broker that ensures the safety of your stocks and is easy to use. Below is an in-depth review of some of the best brokers to buy retail stock with.

1. eToro — Overall best retail stockbroker

Launched in 2007, eToro has quickly become one of the best and largest stockbrokers in the world. It serves more than 20 million users currently. It has a great host of features to provide users with the most convenient experience and has only continued to expand on them over time.

Security and Privacy

Trading is a tricky business, no one wants to go through the added burden of worrying about security or lack thereof regarding their stocks. eToro takes care of the security and privacy of users by using 128-bit SSL encryption. It prevents hackers from reaching any client data. 

Moreover, it is regulated by the SEC, further preventing any illegal activities. It also gives its users the option to enable 2FA that adds an additional layer of security to their accounts. It sends a code to your mobile every time a sensitive action needs to be taken.

Fees and Features

eToro is affordable than most brokerage platforms and charges no commission, deposit, and withdrawal fees. For beginners, there is the option to learn all things trading with the feature called eToro academy. You can browse through the information at your own pace, go over it as many times as needed and educate yourself before investing real money. Another useful feature is ‘CopyTrading’ that lets beginners copy the trading patterns of experienced users. On top of that, it offers powerful charting tools to help you map out your journey in the stock market. 

eToro Fees

Fee Type Fee Amount
Commission Fee 0%
Deposit Fee $0
Withdrawal Fee $5
Inactivity Fee $10 (Monthly)

 

Pros 

  • It is a regulated platform
  • It offers charting tools
  • It offers the feature of CopyTrading
  • eToro Academy for beginners
  • Offers 128-bit SSL encryption
  • 2FA feature protects sensitive information in case of hacking

Cons 

  • Does not have MetaTrader support as of yet

68% of retail investor accounts lose money when trading CFDs with this provider.

2. TD Ameritrade — Traditional retail stock broker

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If you’re looking for a traditional and old-school way of trading stocks, TD Ameritrade is a great option for you. They have been around since the 1980s, making them an extremely reliable option to be entrusting your money with. They have changed names over the years, but they are still going strong.

Security and Privacy

TD Ameritrade says that they ‘take security very seriously’. Similar to eToro, TD Ameritrade is also regulated by the SEC, meaning it is regularly audited and you can rest assured no illegal activities are encouraged there. It also enjoys 128-bit SSL encryption. A unique feature it offers as extra protection is a phrase system user protection. It gives you a special phrase that you can request from TD Ameritrade employees to determine if they are genuine company representatives or not.

Fees and Features

TD Ameritrade is amongst the most affordable trading platforms today. Due to being a platform that has been around for so long, it offers a great variety of stocks – from mutual funds to bonds. You can manage multiple assets on a single platform. It also frequently participates in IPOs, making new assets available to its users. The automatic dividend reinvestment feature reinvests your dividends based on previous patterns to compound your interest in the long run.

TD Ameritrade Fees

Fee Type Amount
Commission 0% (on US stocks) 
Withdrawal Fee $0
Deposit Fee $0
Inactivity Fee $0

 

Pros 

  • 128-bit SSL encryption security
  • It is SEC-regulated
  • A wide range of markets
  • User verification phrase for extra protection
  • Automatic dividend reinvestment to compound your interest

Cons 

  • Leveraged positions have high fees
  • The user interface may be a bit hard to understand

68% of retail investor accounts lose money when trading CFDs with this provider.

3. Robinhood — Easy to use retail stockbroker

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Robinhood operates only in the US and yet has managed to gather an impressive user base of 13 million users. It is still going strong. The investment giant is a mobile-only trading platform targeted toward new users.

Security and Privacy

Robinhood takes its users’ security seriously. It is covered by SIPC insurance that covers up to $500,000 of the investors’ money, and an excess covers a balance up to $10,000,000. This makes it an excellent platform for big investors. Additionally, the platform uses multisig verification for sensitive account actions. 

Fees and Features

Robinhood boasts of a simple and sleek interface, making it an instant draw to the beginners of the stock market. Though most people in the US have a smartphone, Robinhood being a mobile-only platform does limit its user base and alienates potential customers. It offers cash back on daily purchases, a feature that is much appreciated by the users. It’s fee structure is also friendly to the new users. 

Robinhood Fees

Fee Type Amount
Trading Fee 0%
Credit/Debit Card Fee 3.99%
Spread Fee Variable

 

Pros 

  • Offers SIPC insurance
  • Excess insurance over and above what SIPC covers
  • Multisig feature
  • Easy-to-understand interface
  • Available as a mobile app
  • Easy to use
  • Cashback feature on daily purchases

Cons  

  • Some advanced features are missing
  • Experienced traders may find it too basic

68% of retail investor accounts lose money when trading CFDs with this provider.

Buy retail stocks — Broker price comparison

Here is a neat summary of the pricing structure of all the platforms we discussed above. It will help you make an informed decision about who to choose to buy retail stock.

Broker Commission Deposit Fee Withdrawal Fee Inactivity Fee
eToro 0% $0 $0 $10 monthly (after 12 months inactivity)
TD Ameritrade 0% (on US stocks)  $0 $0 $0
AvaTrade $0 on up to 50 shares. Up to $5.95 on more than 50 shares $0 $0 $0

What are the different kinds of retail stocks? 

When retail stock is discussed, most beginners seem to think it is all the same. That is not the case. ‘Stocks’ is often a collective term for all kinds of investments you can have in a company. There are primarily three ways to invest in retail stocks: stocks themselves, ETFs, and CFDs. They have their pros and cons. Let us take a closer look at them.

Stocks

Stocks are the most common way to invest in a company. When you buy a stock in a company, you buy a part of it. It effectively makes you a part-owner of that company. You become entitled to earn dividends – the profits of a company that correspond with your share. Dividends are mostly distributed quarterly or yearly. Secondly, you get voting rights upon buying a certain number of shares. Shares are a great way to earn long-term profits via an association with a company. 

ETFs (Exchange-Traded Fund)

An exchange-traded fund allows you exposure to a variety of companies in one go. A brokerage or a fund manager will bundle up related assets together, making it an easy investment. Grouping assets together greatly reduces risk compared to traditional stocks. If a company’s stock decreases in value, you have other stocks to cover that up. This is especially good when investing in retail stocks, as you get to invest in more than one company at once. However, you don’t get to own underlying assets with ETFs. 

CFDs (Contract For Difference)

Contract for difference is a short-term investment. By investing in a CFD, instead of purchasing an asset, you instead speculate on the rise or fall of the price of said asset. Therefore, you don’t get to own any assets and the investment is short-term. This makes it a high-risk investment as one can lose a large amount if the price swings too much.

Best ways to buy retail stocks

Now that you have a general idea about the different ways to invest in retail stocks, let us take a look at the ways you can benefit by investing in retail stocks. As discussed above, investing in retail stocks consists of investing in stocks of different companies that are usually considered a safe option, meaning they would get you consistent profits. 

Invest in retail CFDs

If you are looking for a short-term investment, CFD is the way to go. This is ideal for people who don’t wish to make long-term investments or are simply starting out in the stock market. With a CFD, you will not be owning an asset, nor will the transaction go on for too many days. That being said, it is considered a high-risk investment, so tread only if you understand the risks associated. 

Invest in retail ETFs

If you are looking for a low-risk investment that offers you consistent results, you may want to look into ETFs. This option lets you invest in a bunch of companies in one go, something you might want to do with retail investing anyway. Even if a company’s stock dwindles in price, you can rely on the stocks of the other companies.

Invest in retail stocks

Traditional stock investing remains one of the best ways to venture into the stock market to this day. It gives you direct exposure to companies while steadily building your wealth. You also stand to make big gains if you are willing to take big risks. If you have a strong faith in any particular retail company such as Amazon or Walmart, traditional stocks may be a better option for you than CFDs or ETFs. 

Is buying retail stocks a good investment? 

So far we’ve discussed the different broker platforms that will help you buy retail stock, the different kinds of stocks, and their pros and cons. Now, let us take a look at retail stocks as an investment option. Retail companies have been around for a long time and will continue to be so in the future. 

Safe option

Retail stocks are usually considered a safe investment option. As stated above, retail companies such as Amazon and eBay have been around for a long time and will continue to be so in the future. If anything, they will only grow and would be able to offer more and better revenues to their investors. Investing in retail stock is highly likely to get you consistent revenues, making it a safe option. 

Steady growth 

With eCommerce growing at a steady rate despite the pandemic, the retail sector is now stronger than ever. Even in the thick of the pandemic, from November 2020 to January 2021, U.S. Census Bureau estimated the sales to grow 5.8%. The same is expected in the holiday season of 2021. Thus, the retail sector is a strong investment choice when you consider the steady growth it has continued to demonstrate. 

Buying retail stocks – what are the risks?

Retail stocks offer great benefits and are highly accessible. However, there is no such thing as a risk-free investment, so it’s worth looking at the risks that come with investing in retail stocks. 

Investors only buy the stores they shop at

Investors are often advised to invest only in options they know and understand. This, when applied to retail investing, becomes quite limiting. Investors only invest in the stores they shop at. They think that them being a consumer of the retail business is enough knowledge. So, they don’t bother to research about it or the other options that may be better. Those options may be better than the one you are investing in. 

Lack of research and knowledge 

As we mentioned in the last point, investors don’t bother researching the retail stocks because they consider them shopping at their stores with enough knowledge. That is not a good approach for any sort of investment, but especially for retail stocks. You need to research individual retail stocks every week or keep up with their basic valuation multiples to make informed decisions regarding buying and selling them. 

How to buy retail stocks with eToro

Buying retail stock for the first time can be confusing and often disheartening in the face of the financial jargon platforms throw at you. In an attempt to make investing easy for everyone to participate in, we have come up with this detailed guide to walk you through the process with utmost ease.

Step 1: Open an account with eToro

To buy and sell retail stocks, you need to register yourself with a broker online. It is important that you choose a trusted broker to trade stocks as a subpar broker will end up extracting exorbitant fees out of you for nothing. After careful research of the popular broker platforms in the market, we recommend eToro. It offers a great blend of simple navigation and powerful features. Simply type ‘eToro.com’ into your browser, click ‘join now’ and fill in your details to enter.

Step 2: Verify your account

Upon creating your account, you will have to verify it as eToro is a fully regulated platform. Fret not, it is an easy process. All you need is a photo ID such as a passport or a driving license and address proof like a bank statement or utility bill.

Step 3: Fund your account

Once you’ve completed the verification process, you have only one step left before buying the retail stocks of your choice. You have to fund your account, which in simple words means putting money in your wallet to spend it. To do this, click on ‘deposit funds’, enter the amount you wish to put in your wallet, say $100, and then click on ‘deposit’. You can perform this action by using your credit/debit card, a bank transfer, or an eWallet such as PayPal.

Step 4: Buy retail stocks!

With the funds deposited in your account, you are ready to make your first purchase. This is the last step of the process. Simply type the name of the retail company you want to invest in, say ‘Amazon’ in the search bar. Next, click ‘trade’, enter the amount you want to buy, such as $50, and lastly, click ‘open trade’. And there you go, you’ve bought retail stock and you can manage it from the portfolio section of your account. 

Conclusion

To sum everything up, retail stocks are a great investment option, especially for beginners in the stock market, or people considering venturing into stocks. They are safe, reliable, and allow you to invest in companies you already may be purchasing from. 

What’s more, it is a sector that continues to show steady growth, even in the midst of a pandemic. That being said, there are certain risks that come with investing in retail stocks, especially if you don’t research them enough. 

As long as you are informed about the happenings of the market and plan your moves strategically, there is no reason you cannot earn good money by buying retail stock.

eToro – Best Broker to Buy Retail stocks

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$50Exclusive promotion
Our score10
  • Buy over 800 stocks with 0% commission
  • Social trading network
  • Copy over 12 million traders and investors
0% Commissionstart TradingOur score 10

FAQs

What is a retail CFD?

What is a retail ETF?

What’s the Future of Retail stocks?

ETFs vs CFDs

Where can I Buy Retail Stock USA?

About Atreyee Chowdhury PRO INVESTOR

Atreyee Chowdhury works full-time as a Content Manager with a Fortune 1 retail giant. She is extremely passionate about writing and helped many small and medium-scale businesses achieve their content marketing goals with her carefully crafted and compelling content. She loves to read, experiment with different cuisines, travel, and explore the latest content marketing and L&D trends in her free time. You can reach her on Linkedin or write to her at [email protected] for any content writing/copywriting requirements.