How To Buy Microsoft (MSFT) Stocks & Shares

Quarterly Update, 26 July 2023

  • Fiscal fourth quarter 2023 revenue $56.2bn, up 8% year-on-year
  • Annual revenue $212bn for fiscal year to 30 June 2023, up 7% year-on-year
  • Fourth quarter net income $20.1bn, up 20% year-on-year
  • Annual net income $73.3 billion, up 6% year-on-year
  • Q4 earnings per share $2.69, up 21% year-on-year
  • Company says new technology such as generative AI added one percentage point of growth to its Azure cloud platform in Q4 and would add two points in current period

Microsoft Corporation is a technology company that generates revenue by developing, licensing and supporting a range of software products and services, by designing and selling hardware, and by delivering online advertising.

Products include operating systems for personal computers, servers, phones, and other intelligent devices, server applications for distributed computing environments, business applications, desktop and server management tools, software development tools and online advertising.

Microsoft also designs and sells hardware including the Xbox 360 gaming and entertainment console.

The company offers cloud-based solutions that provide customers with software, services, and content over the internet by way of shared computing resources located in centralised data centres. Cloud revenue is primarily earned from usage fees and advertising.

Microsoft and artificial intelligence

Microsoft recently disclosed a significant investment in Open AI, the company behind the artificial intelligence (AI) program ChatGPT, with an AI-powered version of its Bing search engine launched on 7 February.

Early trials delivered mixed results, with improved levels of user engagement accompanied by ‘chat’ responses that, in scenarios such as multiple consecutive questions, were “not necessarily helpful or in line with our [Microsoft’s] designed tone”.

On 17 February, the firm said: “Very long chat sessions can confuse the underlying chat model in the new Bing. To address these issues, we have implemented some changes to help focus the chat sessions.

“Starting today, the chat experience will be capped at 50 chat turns per day and 5 chat turns per session (a turn is a conversation exchange which contains both a user question and a reply from Bing).

The firm’s share price edged down in the days after the launch of the AI Bing, with investors waiting to see how Microsoft will manage the chat-related teething problems.

Read more  Cresco Labs Stock: Bear vs. Bull

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

Note: investing in companies comes with no guarantees, and your capital is at risk. When buying company shares, it’s possible to lose some or even all of your money.

Why own shares?

Before buying shares in a 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 Microsoft 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 prompt 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) Know where Microsoft is 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 2.30pm – 9pm (UK time) Monday to Friday.

You should be able to buy US shares through most brokerage accounts. Buying shares in US dollars incurs a foreign exchange fee (typically around 1%) unless you fund the purchase from a US dollar account.

Most brokerages also charge a slightly higher transaction fee for buying US, rather than UK, shares although it’s worth comparing the fees charged by different brokers if you plan to trade US shares regularly.

Read more  How To Calculate ROI For Your Rental Property?

You will be asked to complete a W-8BEN form (valid for three years) which allows you to benefit from a reduction in withholding tax for qualifying US dividends and interest from 30% to 15%. Holding US shares also carries exposure to foreign exchange risk. If the pound strengthens against the dollar, your shares will be worth less in sterling (and vice versa).

As with UK shares, any profit on US shares will be subject to capital gains tax (CGT), unless you hold the shares in an individual savings account (ISA), or self-invested personal pension (SIPP).

3) Do your research

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

4) Decide your investment 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 ‘pound 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 Microsoft 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.

Note that if you’ve made a substantial profit, you may be liable to pay CGT when you come to sell your holdings, especially if your shares were held outside of a tax-exempt wrapper such as an ISA.

The CGT tax-free allowance for the tax year 2023-24 is £6,000, a significant reduction from the £12,300 that was allowed in the previous tax year. Note that the allowance is due to be lowered again, to £3,000, in 2024-25. Find out more here about CGT, rates and allowances.

Read more  The Best Ways to Invest in the Food Sector

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 investment 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.

Frequently Asked Questions

Does Microsoft pay a dividend?

Dividends are a distribution, usually in cash, generally paid by a company to its shareholders half-yearly. Payments are usually met out of that year’s earnings. Companies aren’t obliged to pay a dividend, but may choose to do so for a number of reasons – as a gesture of a company’s support to its financial backer, for example, or as an incentive to shareholders to continue owning shares.

Microsoft has declared a quarterly dividend worth $0.68 payable from 14 September 2023.

Can I buy Microsoft shares with a debit card?

Yes, in the sense that you’d need to add funds using an appointed card to an existing online investing service or trading app before making the share trade from there.

What does it cost to trade Microsoft shares?

This will vary depending on the investment service/platform that an investor is using to trade.

Broadly speaking, there are three main types of fee. First is a share trading fee that investors are charged by a platform each time they buy or sell shares. Note that some platforms charge no fee for this activity, while others may charge a flat fee of typically between £6 and £12.

Second comes the platform fee which is typically levied as an annual fee charged for holding shares on a particular investing platform. Again, some providers impose no fee, others charge a flat fee, and some services charge a percentage, typically 0.25% to.0.45% per annum of the underlying portfolio.

If you buy or sell shares denominated in a foreign currency, nearly all of the investing platforms charge a foreign exchange fee. Again, this will vary amongst providers, but tends to sit in a range from 0.5% to 1.5% per transaction.