Since its inception in 1945, Walmart has transformed into one of the most prominent and recognizable companies globally. Operating nearly 11,000 stores and serving over 240 million customers weekly, Walmart continues to thrive even in the age of Amazon.com. Its stock has shown a steady upward trajectory, growing nearly 100% over the past five years.
If you’re considering investing in Walmart (WMT) stock, this article provides a comprehensive guide to help you navigate the process.
How To Buy Walmart Stock
Step 1: Choose Between a Brokerage Account and Direct Stock Purchase Plan
The initial decision you need to make when considering purchasing Walmart (WMT) stock revolves around the method through which you will buy it. Two primary options stand before you: using a brokerage account or investment app, or choosing Walmart’s direct stock purchase plan.
Brokerage Account or Investment App
Opting for a brokerage account or investment app is the most common approach to buying stocks. Look for a provider that offers low or no trading fees and minimal investment requirements. You can check out our curated list of the best online brokers to help you kickstart your search.
Walmart’s Direct Stock Purchase Plan
Walmart also provides a direct stock purchase plan, a less common but viable option. This plan enables you to purchase Walmart shares directly from the company or a transfer agent, bypassing brokerage commissions. However, it’s essential to note that this method might be costlier in today’s landscape of fee-free trading platforms. To purchase Walmart stock directly through this plan, a $20 one-time setup fee is required, along with a subsequent investment fee of $1 each time.
Step 2: Select the Right Account Type
Once you’ve settled on the method of purchasing Walmart stock, you must decide the type of account in which you will hold the stock. Your two main options are retirement accounts (IRAs) and taxable accounts.
Retirement Accounts (IRAs)
Individual Retirement Accounts (IRAs) offer tax advantages for your retirement savings, allowing your investments to grow over time without immediate tax burdens. However, they come with a significant caveat: withdrawing funds from IRAs before you reach the age of 59½ often results in a 10% penalty, accompanied by applicable taxes. These accounts are geared towards long-term retirement planning and offer a structured approach to building wealth while deferring taxes.
Taxable Accounts
On the other hand, taxable investment accounts don’t provide the same tax benefits as IRAs but grant you more flexibility. With these accounts, you can withdraw funds at any time and for any reason without penalties related to age. This flexibility makes taxable accounts suitable for more general wealth-building endeavors, offering immediate access to your investments.
Step 3: Determine Your Investment Amount
Before diving headfirst into purchasing Walmart stock, take a moment to assess the ideal investment amount based on your financial situation and goals.
Ensure you’re financially comfortable before investing. Cover essential expenses, contribute to your retirement savings, and establish an emergency fund. Once these foundational goals are met, any additional funds can be allocated to individual stocks such as Walmart.
Stay mindful of stock prices, particularly if your chosen brokerage requires the purchase of whole shares. Walmart’s stock price has recently averaged around $130 per share. If this amount seems steep or if you prefer to diversify your investment across multiple stocks, seek a brokerage that supports fractional share purchases.
Walmart won’t be your only investment. Consider how it fits within your broader portfolio of stocks and funds. Ensure your investments align with your overall financial strategy and risk tolerance.
Before investing, conduct comprehensive research into Walmart’s financials. As a publicly traded company, Walmart is obligated to post annual and quarterly reports detailing its financial performance. Access these documents on Walmart’s investor relations site or the Security and Exchange Commission’s (SEC) database to make informed decisions.
Step 4: Execute Your Purchase Order
With your strategy in place and your research completed, it’s time to execute the purchase of Walmart stock.
1. Log into Your Investment Account: Access your chosen brokerage account or investment app using your login credentials.
2. Enter Walmart’s Ticker Symbol: Search for Walmart’s ticker symbol, “WMT,” within the platform.
3. Specify Number of Shares or Dollar Amount: Enter the quantity of shares you wish to purchase or the dollar amount you intend to invest in Walmart stock.
4. Choose Order Type: Select between a market order or a limit order, depending on your preferences and the stock’s price fluctuations.
- Market Order: This order is processed immediately at the current market price. It’s suitable for those looking for quick execution.
- Limit Order: A limit order only executes when the stock reaches a pre-defined price. This can be useful for managing purchases during volatile market conditions or when you have a specific target price in mind.
Keep in mind that Walmart is traded on the New York Stock Exchange (NYSE), which operates from 9:30 a.m. to 4:00 p.m. ET, Monday through Friday. Some brokerages offer access to extended trading hours outside of these times.
How To Sell Your Walmart Stock
When the time comes to sell your Walmart (WMT) stock, the process is relatively straightforward. Follow these steps to navigate the sale with confidence:
1. Log into Your Investment Account: Access your brokerage account or investment app using your login details.
2. Enter Walmart’s Ticker Symbol and Selling Details: Locate the space to input the stock’s ticker symbol, “WMT.” Specify the number of shares you intend to sell or the dollar amount you wish to receive from the sale.
3. Choose Order Type: Just like when buying, you can select either a market order or a limit order for the sale:
- Market Order: This option initiates an immediate sale at the current market price. It’s suitable for quick transactions.
- Limit Order: With a limit order, the sale only goes through when the stock reaches a predetermined price. This can be advantageous when you have a specific price in mind or are anticipating price fluctuations.
4. Confirm and Execute: Review your selling details and confirm the order. Once confirmed, the sale process will be initiated based on the order type you chose.
5. Consider Tax Implications: Keep in mind that selling your Walmart shares might trigger capital gains taxes on any profits. Depending on your situation and the type of account you hold, consult a tax professional to optimize your tax strategy.
Other Investment Options
While purchasing individual company shares like Walmart can be enticing, it’s essential to consider alternative investment approaches that offer diversification and risk mitigation. Here are two prominent options:
1. Index Funds: Index funds are investment vehicles that track a specific market index, like the S&P 500. These funds provide exposure to a broad range of companies within the index, spreading risk across multiple stocks. This approach ensures that if one company’s stock underperforms, others can balance out the losses. Since Walmart is a component of the S&P 500, most index funds that mirror this index include a portion of Walmart shares. This means you indirectly invest in Walmart alongside other major companies, promoting diversification.
2. Exchange-Traded Funds (ETFs): ETFs are similar to index funds, but they trade like individual stocks on the market. Like index funds, ETFs offer diversification by encompassing various assets such as stocks, bonds, or commodities. Some ETFs specialize in specific sectors or themes, allowing you to tailor your investment to your interests. For instance, there are ETFs that focus on retail or consumer goods sectors, potentially including Walmart shares.
Both index funds and ETFs are popular choices for investors seeking a balanced approach to building wealth while minimizing risk associated with individual company performance. These options grant you exposure to a wide array of companies, including Walmart, without concentrating your investments in a single stock.
Learn more: Best Investment Options
