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How to buy IBM shares
This guide will explore a history of IBM, the background to its recent stock market performance and give you some idea of its future prospects.
Compare the best IBM trading platforms
If you have all the information you need and just want to invest, you can do so immediately by visiting one of our trusted brokers below. We’ve assessed all the best brokers and compared them so that picking the right choice for you is quick and easy. If you’re not ready to invest yet, keep reading for more information on IBM.
How to buy IBM stock, a step-by-step guide
The process of buying shares isn’t massively complicated, so don’t worry even if you’re new to investing. These are five simple steps for you to follow.
- Choose a broker. The first thing you need to do is find an online trading platform. There are many different options to choose from, each with their own unique benefits and drawbacks. The comparison table above can help you select the right broker for you, and you can head to our comprehensive broker reviews if you’re still unsure.
- Create an account. Once you’ve selected your broker, simply go to their website and create an account. The steps required for this will vary from platform to platform, but generally you can expect to have to provide your name, email address, phone number, and some form of photo identification.
- Deposit funds. Log into your broker account and select the option to deposit funds. Depending on your broker you’ll have a variety of payment options available; most brokers accept bank transfers and debit card payments, but not all accept e-wallets such as PayPal. Select your preferred payment method and deposit the amount of money you wish to invest in IBM shares.
- Place an order for IBM stock. Search for IBM’s ticker symbol (IBM) and see the current price at which the stock is trading. If you’re happy with the price, enter the amount of shares you wish to own and place your order.
- Execute your order. Once you have placed your order, your broker will automatically execute it for you and your IBM shares will be listed in your account. Congratulations, you’ve just bought shares in IBM!
What is IBM? And should I invest?
IBM (NYSE: IBM) is a multinational computing and information technology company based in the US. It is one of the world’s largest employers and a member of the Dow Jones Industrial Average.
IBM has played a major role in the development of the modern computing system, as its employees are responsible for a number of inventions from disk drives to SQL programmatic language. The company has undergone a few facelifts over the years, most famously in the early 1990s when it transitioned to providing integrated software and support rather than just the hardware itself.
Investors should note that in 2020 it announced it was going to spin-off its managed infrastructure unit into a separate entity, a move largely welcomed by shareholders. Although hardware has been a major part of the IBM brand, the company hopes that a slimmed-down IBM will be able to increase its focus on cloud technology and services, which has been the best performing part of the business for some time.
It is perhaps a more interesting potential investment as a result of the split, but before deciding to invest you’ll want to explore the deeper reasons for why it has decided to make this change. You can find some of these below, as well as some other factors to consider, such as the fact that IBM’s reliance on potential business customers having the capital to upgrade makes them susceptible to broader market conditions.
How has the company performed in recent years?
In the aftermath of COVID-19, IBM’s share price collapsed to $90, its lowest price in a decade. The share price did recover about half of its value, however, largely because IBM had managed to transition towards the cloud enough to benefit from some of the sudden mass transition to working from home and online business.
That is IBM’s greatest challenge in the long run as it tries to transition from its older, traditional business areas into more modern ones like cloud computing, artificial intelligence and blockchain. Its failure to do so explains why it lacks growth as an investment in recent years and has had some big price falls along the way.
Investors have had concerns over the outdated business for some time, and the most glaring example of IBM’s troubles came at the end of 2018. Poor revenue performance from its hardware divisions, which form a significant part of the business, combined with fears over a potential recession which would further reduce the capital available for companies to upgrade their hardware, caused a major slump in the price, down to $110 from $150 in the space of a few months.
To try to address these issues, IBM increased its investment in cloud software, It acquired the open source software company Red Hat in 2019. That investment – fleetingly – boosted its share price back close to $150 and did at least show signs of stronger performance after the 2018 fall.
IBM has also been unfortunate with the timing of the pandemic. Some good news was swallowed up by the market downturn and once again IBM suffered as fears of a recession grew.
Is it a good time to buy IBM shares now?
IBM looks set to focus on cloud technology as its route to reversing a long term revenue decline. Its new CEO was senior VP of its cloud and software division before getting the top job and IBM’s announcement of his accession was greeted well by the market…at least until it was overwhelmed by the onset of the pandemic a few days later. That could be a plus for IBM’s long term future once the pandemic settles down, especially as the move to cloud-based storage and IT services has been accelerated so quickly by 2020.
One of IBM’s challenges is going to be establishing itself in the cloud market against competitors like Amazon and Microsoft, who are much further ahead. IBM is going to spin off its managed infrastructure services unit, reflecting the new reality, its new focus, and shedding a part of the business which has been a drag on growth for a number of years. That decision helped the share price climb in the early part of 2020 as well, before being lost in the uncertainty of the pandemic.
Investors looking for long term growth will have to decide if this is enough for IBM to expand its market share against its more established competition. You can keep up with all the latest news from IBM as well as our analysis of the technology market below.
Is February a good month for buying IBM shares?
IBM shares are down 12.7% YTD. Should I invest?
Buying, selling and trading IBM shares for beginners
What to do before buying shares
You should always take the time to research a stock fully before investing your money, especially if you haven’t bought shares before. The more knowledge you have, the better your chances of making a wise investment.
With that in mind, here’s a checklist to run through before you start.
- Research the company. You should always examine the fundamentals of a company. What is IBM? How did the company get its start? How did it grow? Is IBM’s revenue and profit growth picking up? Is the company innovating? The more you know about IBM, the better positioned you’ll be to make smart investment decisions.
- Make sure you understand the basics of stock investing. Make sure you have an understanding of how the stock market works. This will ensure that you have more clearly defined goals and have thought through how you will achieve them.
- Decide between share dealing and CFD trading. Choose the type of investment strategy you want to pursue, and make sure you have carried out the necessary fundamental or technical analysis for share dealing and CFD trading respectively.
- Set the size of your budget. The golden rule of investing is never to risk more than you can afford to lose. Not every investment you make will result in a profit, so it is important to set a budget that not only allows good potential for capital growth, but also protects against overly damaging losses.
- Find the right broker. Individual brokers each have their own pros and cons. Some will have low fees but have a user interface you struggle to understand, whereas others may be a bit more expensive but come with a range of features that you want to take advantage of. Find the right platform for you by looking over our broker reviews.
- Examine broader market conditions. No stock exists in a vacuum, and it’s always important to analyse the general trends of the stock market as a whole before investing. If a bear market is setting in and stock prices are falling, it’s best to wait it out and invest your money later when the stock is cheaper. If, however, the market is looking bearish, you’ll want to make your investment quickly to get the maximum benefit from rising stock prices. It’s important to stay on top of the latest financial news so you can make the best investment decisions.
What is the difference between buying, selling, and trading shares?
If you’re new to stock investing, then it’s important to understand the basics of how to buy, sell, and trade IBM shares. Here’s a quick run-through of what’s involved in each.
This process involves finding a broker and placing an order for IBM stock, as outlined in the steps further up this page. Ideally you want to time your investment when the stock’s price is low so that you can profit by selling the shares after they increase in value.
When you sell any IBM shares you have bought, you’ll want to do so at a higher price than the one at which you bought to earn a profit.
When you sell is up to you. You might decide to hold for a long period of time, hoping to benefit from the company growing steadily throughout. Or, if you see that IBM’s stock is already up a lot compared to the price you bought it and you’ve noticed that the stock market is starting to fall, it might make sense to sell and take your profits to invest elsewhere. Equally, if the stock has fallen since you bought it and looks set to fall further, it might be a good idea to cut your losses by selling your shares.
Trading is the same process, it’s just done over shorter periods of time with the aim to make small profits on a regular basis. This means that you can make money faster and spend your profits in your day-to-day life – however, on the other side it means you can lose money faster as well. For inexperienced investors, we generally recommend making investments for at least 6 months to a year instead of making trades in quick succession.
You can trade IBM shares through buying and selling shares, or by trading with CFDs. These allow investors to speculate on stock prices and trade with leverage in pursuit of bigger gains. CFDs trading is explained further in the next section, but it is worth noting that beginners should avoid trading with leverage. It comes with large risks and is best left to experienced investors.
Share dealing vs CFD trading
When it comes to investing in any stock, the two options you have are share dealing and trading. Which one of these methods to opt for largely depends on your investment timeline, with investors thinking long term tending to go for share dealing, and those looking for short term gains pursuing a more aggressive trading strategy.
Here’s a quick summary of the two approaches, and the pros and cons of each.
Share dealing refers to the practice of holding shares in a particular company over the long term. When investing like this, you’re seeking to profit either from dividend payments or an increase in the stock’s price over time.
When investing your money this way, it is important to do thorough fundamental analysis of the company in which you are investing. You want to put your money in a stock you believe will trend upwards over time, even if there is some market volatility along the way, rather than get distracted by shorter term peaks and troughs.
- Can build wealth over time to achieve financial goals
- Don’t need to be very reactive to short-term market movements
- Some stocks will give you an income through regular dividend payments
- Takes a long time to realise any profits
- Your capital is tied up in stocks and cannot be used for other investments
If your aim is to generate profits in the short term, then you might be better off trading shares than holding them in your portfolio. Stock trades like this are executed using CFDs (contracts for difference), which allow investors to trade against the value of a stock without having to take ownership of it. When CFD trading, investors are looking to buy and sell stocks fast to profit from short-term fluctuations in value.
One aspect of CFD trading that many investors find attractive is that they allow you to trade with leverage. This means you can place large trades while only putting up a fraction of the value yourself – for instance, if a platform offered leverage of 1:10, you could put £10 into IBM shares and be able to trade £100 worth. This can maximise profits if the market moves in your favour, but be careful as it can also lead to heavy losses.
When trading using CFDs, it is key to be skilled at technical analysis and reading stock price charts. As you’re trading stocks quickly and frequently, the fundamental strength of the company in which you’re investing isn’t as important as being able to predict how its stock price will rise and fall minute-by-minute.
- Can generate fast profits if you read the market right
- Some platforms allow you to trade with leverage
- Prevents your capital being tied up so you can take advantage of investment opportunities
- Trading with leverage is risky and can lead to big losses
- Doesn’t necessarily generate growth over the long term
Consider which approach suits you best and craft an investment strategy that works for you. If you need more information, then simply take our stock trading course and read our guide to CFD trading to get you up to speed.
How to choose a broker
With the wide variety of online brokers available these days, it can be hard to figure out which is the best service to go with. Our comparison table and in-depth reviews can help you cut through the noise, but by and large these are the aspects you should be considering when selecting a broker:
- Range of stocks available. The most important thing is that you can actually use the broker to find the shares you’re looking for. Some brokers offer more stocks than others, and many will allow you to trade other assets, such as forex and commodities.
- Fees and commissions. You want to keep as large a chunk of your profits as you can, so it’s important to make sure your broker doesn’t charge high fees that can eat into your profits.
- Regulation. You should only use regulated brokers to place trades. Unregulated brokers can be risky and offer little to no protection if the business were to fail while you had funds in your account.
- Payment methods available. You might want to get IBM shares using a specific payment method, such as PayPal. Not all brokers accept every payment method, but using our comparisons you can search only the brokers that support the option you’re looking for.
- Reputation. One of the strongest indicators of a broker’s reliability is the reputation it has with the customers who have used it. Brokers are online businesses, and as such many user experiences can be found online. You can check these out in addition to our reviews to make sure you choose the right platform.
- Customer service. As you’re going to be investing your money using the platform, you want to check that the broker offers good customer service in case you have a query or something goes wrong.
Latest IBM news
43% of the companies are accelerating AI investments, reveals IBM survey
IBM reports a surprise increase in revenue in the first quarter
IBM’s revenue slides 6% in the fiscal fourth quarter
IBM agrees to return £17.83 million to the USF to settle FCC investigations
IBM Corp reports £1.78 billion of net income in the fiscal third quarter
IBM to spin off its IT infrastructure services business into a separate public company
Try some of our stock market courses for beginners
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