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You don't have to be a nerd to want to get your hands on some tech stock — information technology drives a significant part of the U.S. economy, after all. One such technology company, Advanced Micro Devices Inc., or AMD, produces semiconductors used in computers and competes with such companies as Intel and Samsung.
Here's what to consider before you invest and how to buy AMD stock.
1. Look at the fundamentals of AMD stock
Before investing in any individual stock, it's a good idea to check out the company's recent earnings reports, which will detail recent business performance. AMD's earnings report can help you understand the company's financial standing, its competitors and whether you're ready to weather any bumps in the road as you invest.
» Still confused? See our guide on how to research stocks
2. Consider whether you should buy AMD
Regardless of how well AMD (or any stock) performs, the risks and rewards of AMD stock also depend on your investment goals, portfolio diversification and timeline.
First, to limit your investment risks and losses, be sure you have a solid emergency fund and diversified portfolio before you begin trading. Do you have several months of living expenses saved and accessible? And is your investment portfolio spread across a range of assets to manage risk? If you already have several high-growth (and high-risk) technology stocks in your portfolio, you should think carefully about the value of adding another.
Do you have another goal or purpose for the money you'd like to invest, like a home or college savings?
Do you need to access the money you plan to invest in the short term? If you're not ready to leave this money invested for at least five years, you may not have time to sit out market volatility.
If you've thought it over and AMD fits your financial plan, your next step is to find a brokerage.
» Learn more about how to diversify your investment plan
3. Open a brokerage account
If you already have a broker or brokerage account, head to step four.
Otherwise, you'll need to research and select a low-cost broker to purchase the stock. Select a broker based on your investment choices — such as buying AMD stock — the research and data the broker offers access to and other features that might be important to you, such as a mobile trading app.
The process of setting up a brokerage account takes around 15 minutes. Once you open and fund your account, you're ready to trade.
» Learn more about opening a brokerage account
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4. Decide how much to invest in AMD
The last three decisions are how many shares you'd like to purchase, how soon and at what price.
If you place a "market" order, that means you'd like to invest as soon as possible, regardless of the price you'll pay. A "limit" order tells your broker you want to buy the stock, but only if it reaches a set price. Limit orders may not execute at all for that reason.
And if the price of AMD is too high, consider fractional shares or purchasing portions of a stock share based on a particular dollar amount. Not all brokers offer them, but buying fractional shares can be an excellent strategy for quickly diversifying a financial portfolio on a budget.
Neither the author nor editor held positions in the aforementioned investments at the time of publication.