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Investments in OTC Stocks

written by: •edited by: Rebecca Scudder•updated: 8/10/2011

Microsoft and Apple are perhaps two of the best known NASDAQ stocks. Individual investors can buy NASDAQ stocks by working with their broker or investing in mutual funds that hold these stocks in their portfolio. DRIP investments are also available for some NASDAQ stocks.

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    Common Stocks Traded Via NASDAQ

    NASDAQ Surprisingly there are some very popular companies who have their stocks traded on NASDAQ. These companies include Apple, Microsoft, Aflac Incorporated,, Inc. and others. These names are common to many people whether they invest or not. New investors are often confused and some may wonder if they can buy NASDAQ stocks and how do they go about it? It really sounds more frightening than it is.

    There are some things that those who are considering investing for the first time need to understand, so here are some tips:

    Contacting a stock broker - First time investors will want to contact a stock broker for assistance in placing trades. It is a good idea for them to verify the standing of the broker as well as their firms before they open an account. This may be done through the Securities and Exchange Commission (SEC) by using the free tools that are provided;

    Understanding losses - Investments of all types carry risks. Regardless of how large or well known a company is, stock prices fluctuate and investors may lose all or part of the money they invested;

    Opening an investment account - Regardless of whether an investor is interested in a DRIP account or opening a traditional brokerage account, there may be minimum investments. Be sure to ask the stock broker prior to making an investment decision. Stock brokers will ask for financial information from investors to determine how much risk is appropriate. Stock brokers also charge fees in the form of commissions.

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    How to Get Started With NASDAQ Stock Purchases

    Investment Dollars Buying a NASDAQ stock is very similar to purchasing stocks on the New York Stock Exchange (NYSE). Investors first open an account with a reputable stock broker, make a decision as to what stocks they wish to purchase and place the order through the stockbroker. Depending upon the company, an investor may be asked to deposit money in their account prior to placing a trade. In other cases, the broker would place the trade, contact the investor once it has been confirmed and then request the shareholder send them the money to pay for the trade.

    Another method that may be used by investors is a DRIP plan. These plans allow the shareholder to purchase NASDAQ stocks directly from the company. The investor would receive directions on how to open their account, deposit the money that they agree to invest and the appropriate number of shares would be purchased. Many NASDAQ (and NYSE) traded companies allow for these types of investments. Depending on the company, the up-front investment may be as little as $25 and as high as $1,000. Carefully review all of the terms of the plan before sending any money.

    Investors must understand all of the risks associated with the purchase of stocks or bonds. While past performance is not always a good guide, it can be helpful to investors to review the company's overall stock performance to see what types of risks they are taking. Shareholders have rights and one of those rights is minimizing thei rrisks. All shareholders should see investment advise when making any investment.