Google is one of the most well-known tech brands on the market.
If you use Google for email services, web searches or anything else, investing in the company's stock might be on your radar.
Buying what you know is an often-repeated investing rule.
If you're new to investing or you're used to buying mutual funds but not individual stocks, here's what you need to know to buy shares in Google.
Google: Company Overview
You might know Google best as a search engine but the company is much more than that.
Founded in 1998, Google specializes in internet-related products and services.
That includes things like advertising, email services, cloud storage and of course, mobile wallet technology.
Google also owns YouTube and is the developer of the Android operating system for mobile devices.
Google primarily makes money by selling advertising space online. Companies pay to have their ads featured on websites, blogs, YouTube and other channels.
One of Google's biggest competitors is Apple. The iOS operating system and Apple Pay are direct competitors to Android and Google Pay.
Other competitors in the tech space include Microsoft, Amazon, Facebook, Yahoo, and AOL.
Google is one of the most highly valued companies in the world, with a market capitalization of around $833 billion.
Research and Analysis
Any time you're thinking of buying a stock, it pays to do your homework. There's a right and wrong way to approach vetting stocks.
First, keep in mind that everyone does this differently. There's no way to analyze a company to guarantee that you'll earn the kind of returns you're after.
And there are different strategies for analyzing stocks. For example, there's fundamental analysis, which looks at a company's fundamentals to gauge its financial strength and health. Fundamentals include things like:
- Earnings per share
- Price to earnings ratio
- Projected earnings growth
- Dividend yield (if the stock pays dividends)
Fundamental analysis looks at how strong the company's management is and which way revenues are trending to determine a stock's value as accurately as possible.
Technical analysis, on the other hand, is another approach that looks at market trends and future predictions to determine whether a stock is a good buy. With this type of analysis, you're looking at what a stock has done in the past to try and gauge what it will do in the future.
Stick With the Basics
If you're trying to decide whether to buy Google stock, focus on the indicators that are easiest to understand. That includes:
- Company financial statements
- Balance sheets and how much debt the company's carrying
- Quarterly filings
- Cash flow
- Quality of the management team
- The overall business model
- Future growth plans
These details can give you insight into a company's strength. But keep in mind that no matter how good a stock looks on paper, that doesn't guarantee solid returns.
Something else to watch out for is trying to time the market. Timing the market means buying or selling shares at an optimal time for maximum profits.
The trouble with that is that the stock market is unpredictable even on its best days.
Looking at Google's share price over just the last five years, you can see a steady upward trend. But there have been times when the stock's price dipped sharply.
How to Buy Google Stock Shares
If you've made up your mind that buying Google stock is right for you, the next step is actually adding some shares to your portfolio.
Here's a quick and easy guide for how to buy Google stock, even if you're a total investing beginner:
1. Open a brokerage account
Brokerage accounts are trading accounts that you can open with a brokerage company.
A brokerage account isn't like your 401(k) at work or an individual retirement account (IRA).
These accounts are designed to let you trade stocks, mutual funds, exchange-traded funds and other investments. But instead of being tax-deferred, you pay capital gains tax on earnings as you realize them.
There are a number of companies that offer brokerage accounts online.
When opening a brokerage account to buy Google stock, pay attention to:
- The minimum balance required to open an account
- Stock and fund trading commission fees
- What type of research tools are available
- What else can you invest in besides stock?
The fees are especially important since some companies charge a fee ranging from $4 to $10 per trade. That can add up quickly if you're trading stocks regularly.
Also, look beyond stocks to see what else you can trade.
For example, you may want to be able to invest in options, futures or mutual funds.
2. Execute a buy order
The next step is initiating a buy order to purchase shares of Google stock. Here's where it's important to know what you're buying.
Google has two different share class types available for trading.
- The first is Class A shares. These have the ticker symbol GOOGL.
- The second is Class C shares, which have the symbol GOOG.
Both Class A and Class C shares are traded on the Nasdaq stock market exchange.
So what's the difference?
GOOGL shares are common stock. These are the shares that most investors buy. As a GOOGL shareholder, you have voting rates at the annual shareholder's meeting.
GOOG shares don't have the same voting rights as GOOGL shares. Class C shares were created as a result of a stock split. These shares often trade at a discount to Class A shares.
Which one to buy depends on whether or not you want voting rights. If you do, then you'll get that with GOOGL shares. If you don't, then you might consider buying GOOG instead.
Once you sort out which Google shares you want to buy, the next step is deciding how many shares to purchase.
Google stock has been trading at above $1,000 per share for a while so you might buy a few shares or a lot, depending on how much you have to invest.
Market Order vs. Limit Order
The final step is deciding whether to execute a market order or a limit order.
A market order purchases stock shares at whatever its current price is. A limit order purchases stock shares only when a stock reaches a price threshold that you set.
A market order could be the better choice if you're placing a smaller buy order for Google stock. You might pay a little more for your shares if you're buying at the market order price. But returns may be more consistent if you hold the stock for the long term.
3. Consider buying mutual funds or ETFs instead
Buying individual stocks can be risky if stock market volatility causes the share price to wobble up or down.
If you tie up $5,000 or $10,000 in just a few Google shares, you're taking a gamble that those shares are going to maintain or appreciate in price.
A way to spread out some of the risk is buying mutual funds or exchange-traded funds that include Google and other stocks. Mutual funds hold a collection of investments, including stocks and bonds. ETFs are the same but they trade on an exchange, just like a stock.
For example, you might buy an ETF that's focused on the tech sector. It could include Google, as well as other tech giants like Facebook or Amazon.
If Google's stock takes a dip but the other stocks in the fund hold strong, they can help to smooth out any losses. This way, you don't tie up all of your money in a single stock and risk big losses.
If you're comparing mutual funds and ETFs that include Google, keep these differences in mind:
- Mutual funds may have higher minimums to invest compared to ETFs.
- ETFs may carry lower expense ratios compared to a mutual or index fund.
- ETFs can also trigger fewer taxable events since the underlying investments typically don't turn over as often.
When looking at Google inside a fund, take time to research the other companies that are included.
Go back to those same basics you used to evaluate Google to evaluate the other holdings to make sure it's a good buy for you.
Consult an Advisor
Any time you're planning on buying into a new stock or another investment, it's a good idea to talk to a financial advisor.
An experienced advisor can offer advice on whether a particular stock fits your overall investing strategy.
They can also help you decide how much of your portfolio to earmark for that stock.
If you invest with a robo-advisor, check to see if human advisors are on hand to answer questions. While robo-advisors by nature rely on algorithms, rather than human insight, some platforms still keep a stable of advisors on hand to answer investor questions.
When talking to an advisor about how to buy Google stock and whether you should, remember to keep your risk tolerance, goals and time frame for investing in mind.
Consider what you need your investments to do for you now and in the long-term to make sure it's a good fit.