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How To Buy Shares in Microsoft – Forbes Advisor Australia

Software giant Microsoft Corp. announced better-than-expected results for its fiscal third quarter that ended in March this year, shrugging off some of the macroeconomic concerns hanging over the technology sector.

Quarterly sales and earnings topped analysts’ expectations, boosted by robust growth in cloud-services demand. Revenue in the third quarter rose 18% to $US49 billion, while earnings per share lifted to $US2.22 from $US1.95 a year earlier. 

For Q4 FY22, due to be released soon, the mid-point of the outlook suggests year-on-year growth of 14% in revenues, 11% in Earnings Before Interest and Taxes (EBIT) and 5.6% in Net Income.

Satya Nadella, Microsoft chief executive, predicted that customer tech spending would remain buoyant even if general economic growth slowed thanks to a combination of soaring inflation, rising interest rates and the potential for a post-pandemic fall-off in IT spending.

Mr Nadella said: “Going forward, digital technology will be the key input that powers the world’s economic output. Across the tech stack, we are expanding our opportunity and taking (market) share as we help customers differentiate, build resilience, and do more with less.”

Here’s what you need to know about buying and selling Microsoft shares.

Note: investing in companies comes with no guarantees. When buying company shares, it’s possible to lose some, and very occasionally all, of your money. Past performance is no prediction of future performance and this article is not intended as a recommendation of any kind.

Why own shares?

Before buying shares in any company ask yourself why you’re taking that decision. Does the company have great future prospects with a share price that could go from strength-to-strength?

Or is there takeover talk in the offing that could potentially drive up a company’s share price? Maybe the company you’ve identified is on a recovery mission and its share price is starting to recover from previous lows.

How to buy shares

There are several steps to take once you’ve satisfied yourself about the reasons for buying shares in a particular company.

1) Open an account

Whether you’re a seasoned share trader, or someone who is brand new to stock market-based investments, if you want to buy shares in Microsoft, you’ll need to open an account with a regulated brokerage.

Stockbroking is a competitive market place nowadays and services for DIY investors come in a range of different guises – from online investing platforms run by some of the biggest names in financial services, to nimbler investment trading apps that work off your smartphone or tablet.

Before opening an account, bear in mind the following:

  • Keep your ultimate financial goals in mind
  • Be prepared to ride out stock market ups and downs
  • Aim to keep trading costs to a minimum
  • Remember that share investing can incur tax charges, for example, when selling part of your portfolio.

And before buying any shares ask yourself these questions:

  • Should I take financial advice?
  • Am I comfortable with the level of risk in question?
  • What’s my investing budget?
  • Can I afford to lose money?
  • Do I understand the company in which I’m looking to invest?
  • Am I protected if my platform provider/adviser goes out of business?

2) Where is Microsoft traded?

The ticker symbol for Microsoft is MSFT and the company is traded on the Nasdaq market in the US. Nasdaq’s trading hours are 9.30pm-4pm, Monday to Friday.

Check you can buy US shares through your brokerage account and watch for foreign transaction fees. 

Under the Double Tax Agreement between the US and Australia, there are specific tax rules governing income dividends.

Share dividends are taxed in the US. As a result, US companies must withhold and pay 30% of share dividends to the US Internal Revenue Service (IRS), which you may be able to reduce to 15% through your Australian income tax return as part of a foreign income tax offset (FITO).

However, as each case varies, it’s worth speaking to a dedicated tax agent on what your individual financial position is likely to be and the requisite forms that need to be filled out.

3) Do your research

To find out more about Microsoft, go online and visit the company’s investor relations page.

4) What’s your investing strategy?

People tend to invest in one of two ways: either with a lump sum purchase, or via smaller, steadier amounts over time.

The latter method is often referred to as a means of ‘dollar cost averaging’, a stock market hack which may help you pay less per share on average over time. Rather than waiting to build up a lump sum, it means an investor’s money is being put to use in the market straightaway.

5) Place an order

Once you’re ready to buy shares in Microsoft, log in to your investing account or trading app. Type in the ticker symbol MSFT and the number of shares you want to buy, or the amount of money you’re prepared to invest.

6) Review Microsoft’s performance

Whether your share portfolio is crammed full of companies or holds only a handful of stocks, it’s vital you monitor how each component is performing on a regular basis: monthly, quarterly, or annually.

Doing this gives you the opportunity to review performance and ask if any adjustments to your holdings are required – to maintain the status quo, buy more stock, or sell existing shares.

How to sell shares

If you’re pleased with the performance of your shares and want (hopefully) to take a profit, there will come a time when you’ll want to sell your holdings. To do so, log in to your investing platform, type in the ticker symbol and select the amount that you want to sell.

If you’ve made an overall profit, you will be liable to pay Capital Gains Tax (CGT) in Australia when you sell your holdings. If you have owned the sharers for less than 12 months, you will have to pay 100% of the value of your capital gain at your applicable income tax rate—talk to your accountant about this.

However, if you have owned the shares for longer than 12 months, you will likely only need to pay 50% of the capital gain under Australia’s CGT discount rules.

How to invest in Microsoft via a fund

Investing directly in individual stocks can be an absorbing and, hopefully, profitable experience. It may also qualify you for shareholder perks specific to the company in question.

However, investing directly in individual companies can leave you vulnerable to stock market volatility and unforeseen swings in share prices.

That’s why financial experts recommend that most people invest in a diversified mix of asset classes and funds that hold hundreds, if not thousands, of company shares.

Being a major component of the Nasdaq index, Microsoft is found in many funds incorporating a bias towards the US.

Note: investing in companies comes with no guarantees. When buying company shares, it’s possible to lose some, and very occasionally all, of your money. Past performance is no prediction of future performance and this article is not intended as a recommendation of any kind.

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