How to Buy Amazon Stock on Robinhood: A Deep Dive for Savvy Investors

So, you’re ready to dive into the world of Amazon and want to use Robinhood to do it? Excellent choice. Buying Amazon stock (AMZN) on Robinhood is a relatively straightforward process, but understanding the nuances can make the experience even smoother and more rewarding. Here’s how you do it:

1. Fund Your Account: Ensure you have sufficient funds in your Robinhood account to cover the cost of at least one Amazon share (or a fractional share if that’s your preference) plus any potential small fees. You can transfer money from your bank account directly to your Robinhood account.
2. Search for Amazon (AMZN): Use the search bar at the top of the Robinhood app or website and type “Amazon” or its ticker symbol, “AMZN.”
3. Select Amazon: Once you find Amazon in the search results, click on it. This will take you to Amazon’s stock page, providing you with real-time price information, charts, and relevant news.
4. Initiate a Buy Order: On the Amazon stock page, you’ll see a “Buy” button. Click on it.
5. Choose Your Order Type: Decide whether you want to buy in dollars (fractional shares) or in shares. If you choose dollars, you specify how much money you want to invest in Amazon. If you choose shares, you specify the number of shares you want to purchase.
6. Select Order Type (Market or Limit): Choose between a market order (executed immediately at the best available price) or a limit order (executed only when the stock reaches a specified price). Market orders are faster but you may not get the exact price you see. Limit orders give you more control over the price but may not be executed if the price doesn’t reach your limit.
7. Review Your Order: Double-check all the details of your order, including the quantity of shares or dollar amount, the order type, and the estimated cost.
8. Submit Your Order: If everything looks correct, swipe up or tap the “Submit” button to place your order.
9. Order Confirmation: Robinhood will confirm your order and notify you when it has been executed. You can view the status of your order in the “History” section of your account.

Navigating the Nuances: Order Types and Fractional Shares

Understanding order types is crucial. A market order is the simplest and fastest, guaranteeing execution at the current market price. However, prices fluctuate, so the final price might be slightly different from what you saw when you placed the order. A limit order, on the other hand, allows you to specify the maximum price you’re willing to pay. If the stock price doesn’t fall to or below your limit, the order won’t be executed. This provides greater control but might result in missed opportunities.

Fractional shares have democratized investing. Amazon stock can be quite expensive. Instead of needing to buy a whole share, you can purchase a fraction of a share, allowing you to invest any dollar amount you choose. This makes it easier to diversify your portfolio, even with limited capital.

Frequently Asked Questions (FAQs) About Buying Amazon Stock on Robinhood

Here are the answers to the 12 most frequently asked questions.

1. What are the Fees Associated with Buying Amazon Stock on Robinhood?

Robinhood has built its reputation on commission-free trading. That means you generally won’t pay fees for buying or selling Amazon stock. However, there may be very small regulatory fees associated with trades, and Robinhood offers premium services (Robinhood Gold) that come with a monthly fee. Always check their current fee schedule on their website.

2. How Quickly Will My Order Be Executed?

Market orders are typically executed almost immediately, within seconds. Limit orders will only be executed if and when the stock price reaches your specified limit price, which could take minutes, hours, days, or never.

3. Can I Buy Amazon Stock on Robinhood After Hours?

Yes, Robinhood offers extended trading hours. However, liquidity may be lower during these hours, potentially leading to wider spreads and slower execution. Be mindful of the increased volatility that can occur during extended hours.

4. Is My Money Safe on Robinhood?

Robinhood is a member of the Securities Investor Protection Corporation (SIPC), which protects securities customers of its members up to $500,000 (including $250,000 for claims for cash). While SIPC protects against broker failure, it doesn’t protect against investment losses due to market fluctuations.

5. How Do I Sell My Amazon Stock on Robinhood?

The process for selling is similar to buying. Navigate to your Amazon stock page, click the “Sell” button, specify the number of shares or dollar amount you want to sell, choose your order type (market or limit), review, and submit your order.

6. How Do I Set Up a Recurring Investment in Amazon Stock on Robinhood?

Robinhood offers the ability to set up recurring investments. You can schedule regular purchases of Amazon stock (or fractional shares) on a daily, weekly, bi-weekly, or monthly basis. This can be a great way to dollar-cost average your investment.

7. What are the Tax Implications of Buying and Selling Amazon Stock?

Any profits you make from selling Amazon stock are subject to capital gains taxes. The tax rate depends on how long you held the stock. Short-term capital gains (held for less than a year) are taxed at your ordinary income tax rate, while long-term capital gains (held for more than a year) are taxed at a lower rate. Consult with a tax professional for personalized advice.

8. How Do I Transfer Amazon Stock From Another Brokerage to Robinhood?

Robinhood allows you to transfer assets from other brokerage accounts. The process typically involves initiating a transfer request from within your Robinhood account and providing information about your existing account. There may be fees associated with transferring assets, especially from the outgoing brokerage.

9. Can I Buy Amazon Stock in an IRA on Robinhood?

Yes, Robinhood offers Traditional, Roth, and SEP IRAs. You can purchase Amazon stock within these retirement accounts, potentially offering tax advantages depending on the type of IRA.

10. How Do I Use Stop-Loss Orders on Robinhood to Protect My Investment in Amazon Stock?

A stop-loss order is an order to sell your stock if it reaches a certain price. This can help limit your losses if the stock price declines. You can set up stop-loss orders directly on Robinhood through the order type options.

11. What is Dollar-Cost Averaging, and How Can it Benefit My Amazon Stock Investment?

Dollar-cost averaging (DCA) is a strategy where you invest a fixed amount of money in a stock at regular intervals, regardless of the price. This can help reduce the risk of investing a large sum at the wrong time and potentially lead to better long-term returns. Robinhood’s recurring investment feature makes DCA easy.

12. How Do I Research Amazon Stock on Robinhood?

Robinhood provides access to basic information about Amazon, including its stock price, charts, news, and some analyst ratings. However, for more in-depth research, consider using other financial websites or research tools. Robinhood should be considered a starting point, not an end point, for your due diligence.

Buying Amazon stock on Robinhood is a convenient and accessible way to participate in the potential growth of this tech giant. By understanding the process, exploring different order types, and taking advantage of features like fractional shares and recurring investments, you can make informed decisions and build a portfolio that aligns with your financial goals. Remember to always do your own research and consult with a financial advisor before making any investment decisions. Good luck!