JPMorgan Chase & Co. is a big American bank headquartered in New York City. It’s the largest bank in the U.S. and the world, measured by market value as of 2023. Because of its size, it’s closely watched by regulators. Its roots go back to 1799, with the founding of the Chase Manhattan Company. In 2000, it merged with J.P. Morgan & Co. to form today’s entity.
JPMorgan Chase provides various banking services, including investment banking, asset management, and retail banking under the Chase brand. It’s one of the largest banks globally, with $3.9 trillion in assets, and operates the world’s biggest investment bank by revenue.
Despite its success, the company has faced legal issues related to fraud and misconduct.
In this guide, we’ll walk you through the process of buying and selling JPMorgan stock, as well as explore other investment options for a diversified portfolio.
How to Buy JPMorgan Stock
Step 1: Open a Brokerage Account
To invest in JPMorgan stock, you need to open an account with an online brokerage or investment app. If you don’t have one, you can check out our curated list of the best online brokers to help you start your search.
Brokers act as the intermediary between you and the stock market. They execute your trades, buying and selling stock on your behalf. There are a wide range of brokerage options available, including full-service brokers and robo-advisors.
Many brokers now offer fee-free stock trading. But before you start, check if there are any hidden fees or if you need to have a minimum amount in your account. To determine the type of account you need, think about your own investment goals.
- For long-term retirement savings, consider a Roth for tax advantages. If you’ve held your Roth IRA for at least five years, you can withdraw money without paying taxes or penalties. Unlike a Traditional IRA, a Roth IRA doesn’t have mandatory minimum withdrawals.
- If you’re saving for general goals like building wealth or a home down payment, a taxable investment account might be a more viable option. Unlike an IRA or a 401(k), you can withdraw your money at any time, for any reason, with no tax or penalty from a brokerage account.
Step 2: Research JPMorgan’s Fundamentals
Before investing in any company, including JPMorgan, it’s important to do thorough research. Here’s what you should do:
Access JPMorgan’s financial reports, like the annual 10-K and quarterly 10-Q filings. As a publicly traded company, JPMorgan is required to file regular financial and performance reports with the U.S. Securities and Exchange Commission (SEC). These reports provide valuable insights into the company’s financial health and prospects. You can find these reports on JPMorgan’s investor relations site or the SEC’s database.
Check out expert analyses from trusted third-party sources like Fidelity, Morningstar, or Forbes. Brokerage firms. This will give you insights into JPMorgan’s financial health, growth prospects, and potential risks.
Step 3: Decide How Much to Invest
Before you start investing in JPMorgan’s stock, set your investment budget. The amount of money you invest is typically determined by the following factors:
- Portfolio Integration: Consider how much of your portfolio you want to tie to JPMorgan’s business performance. Experts suggest limiting exposure to individual stocks like JPMorgan to a maximum of 5% of your total portfolio.
- Financial Goals: Make sure your investment doesn’t interfere with your monthly expenses, emergency funds, and retirement savings. At the top of your priority list should be an emergency fund. Experts suggest aiming for three to six months’ worth of expenses.
- Budget: If you can’t afford a whole JPMorgan share, you might consider buying a fractional share, which is a portion of a share. Many brokers now provide the option to purchase fractional shares of individual stocks.
- Investment Strategy: Decide between lump-sum purchase or regular investments using dollar-cost averaging. Dollar-cost averaging can lower investment risk but may not lead to outsized returns.
Step 4: Place Your Order
To buy JPMorgan stock, log into your investment account and place an order. You will need to decide on the type of order that best suits your investment strategy. For beginners, there are two primary order types to consider:
Market Order: With a market order, you buy shares at the current market price when you place your order. This type of order is straightforward and executes quickly.
Limit Order: A limit order allows you to set the price at which you are willing to purchase JPMorgan shares. Your order will only be executed if shares are available at or below the price you specify. This can be particularly useful for stocks prone to price volatility.
Step 5: Monitor JPMorgan’s Performance
After you buy shares of JPMorgan, it’s important to keep an eye on how well they’re doing and stay updated on any news about the company.
Check how much your investment grows or shrinks every six months or a year. This helps you evaluate the performance of JPMorgan compared to other companies and the major indexes such as S&P 500.
Keep watching JPMorgan’s financial reports like you did before buying the shares. Knowing how the company is doing financially helps you decide whether to keep your shares or sell them.
Remember, stock prices usually fluctuate during the day and even after hours. Don’t stress about every little change. Just check in every now and then to see how things are going.
How to Sell JPMorgan Stock
At some point, you may decide to sell your JPMorgan shares. The process is straightforward:
- Log into your investment account.
- Specify the number of JPMorgan shares you want to sell or the dollar amount you wish to liquidate.
- Select the type of sell order that aligns with your goals. You can use a market order to sell at the current market price or a limit order to set a specific selling price.
Note: If you hold JPMorgan shares in a regular investment account (non-tax-advantaged), you may incur capital gains taxes when you realize a profit. You might want to consult with a tax professional to explore strategies to minimize your tax liability.
Other Investment Options
Trading individual stocks like JPMorgan may not be suitable for everyone. It requires extensive research and a tolerance for stock market volatility. Fortunately, there are alternative investment options to consider:
Index Funds: Index funds are investment vehicles that allow you to buy exposure to a diversified portfolio of stocks. They aim to replicate the performance of a specific market index, such as the S&P 500. JPMorgan is a significant component of the S&P 500, making it a part of many index funds.
Exchange-Traded Funds (ETFs): ETFs are similar to index funds but trade like individual stocks. You can invest in ETFs that track various market indices, sectors, or themes. As with index funds, JPMorgan’s presence in major indices means that many ETFs include it in their holdings.
Sector-Based Index Funds: If you wish to focus more on JPMorgan or the financial sector, consider sector-based index funds. These funds concentrate on specific industries or sectors, providing targeted exposure. Examples include iShares U.S. Financial Services ETF (IYG) and Financial Select Sector SPDR Fund (XLF).
Learn more: Best Investment Options
