How To Buy Microsoft (MSFT) Stocks & Shares

Software giant Microsoft Corp. has 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 £38 billion ($49 billion), while earnings per share lifted to £1.69 ($2.22) from £1.50 ($1.95) a year earlier.

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.

That said, over the long term – and by this we mean a bare minimum of five years (and preferably much longer) – chosen wisely, it’s possible for shares-based investments to produce far superior returns to those available from, say, ultra-safe, low interest-paying deposit accounts. Especially once inflation has been factored in.

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 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) 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 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.

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, unless you hold the shares in an Individual Savings Account or Self-Invested Personal Pension.

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 ‘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 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 Capital Gains Tax (CGT) when you come to sell your holdings, especially if your shares were held outside of a tax-exempt wrapper such as an Individual Savings Account.

The CGT tax-free allowance for the tax year 2022-23 is £12,300. Find out more here about CGT, rates and allowances. 

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.