How to Invest in Amazon Stock

Amazon (AMZN -0.48%) is the world's second-largest retailer behind Walmart (WMT -1.61%). The e-commerce giant generated $330 billion in total revenue in 2022.

The company is increasing its revenue at a brisk rate and could overtake Walmart as the world's largest retailer as early as 2024. Amazon's growing sales have helped drive its stock price higher over the years, and the upward movement could continue.

You're probably contributing a fair share to Amazon's growing revenue, which might have you thinking about investing in the company. Here's a step-by-step guide on how to invest in Amazon stock, including how much it costs to buy shares of the top e-commerce company.

How to buy

How to buy Amazon stock

You can buy shares of Amazon from any brokerage account. If you still need to open one, these are some of the best-rated brokers and trading platforms. Here's a step-by-step guide to buying Amazon stock using the five-star-rated platform Fidelity.

Fidelity makes it easy to buy stocks. Its website offers a video tutorial and a step-by-step guide. Here's a screenshot of how to place a stock trade with Fidelity:

On this page, fill out all the relevant information, including:

• The number of shares you want to buy or the amount you want to invest to purchase fractional shares.
• The ticker symbol (AMZN for Amazon).
• Whether you want to place a limit order or a market order. The Motley Fool recommends using a market order since it guarantees you buy shares immediately at the market price.

Once you complete the order page, click the "Place Order" button at the bottom and become an Amazon shareholder.

Should I invest?

How much does it cost to buy Amazon stock?

For years, Amazon stock had seemed out of reach to many beginning investors because its stock traded at a high price per share. However, the e-commerce giant completed a 20-for-1 stock split in 2022. The split reduced the share price from its pre-split level of about $2,300 per share to a post-split price of $115 per share. In reducing the stock's cost, Amazon made buying shares more accessible to beginning investors.

The share price has increased a little bit since its split in 2022. However, the purchase of one share is still within the reach of people who are just starting their investing journey. In late 2023, Amazon's stock was about $145 per share.

If $145 per share is still too high for you, don't fret. You have another option that will allow you to buy shares of Amazon with little money.

Many brokerage platforms enable users to invest in fractional shares. A fractional share is less than one full share. (Here are some of the best brokers for fractional share investing.) Many of those brokers allow you to invest for as little as $1 in Amazon and other companies, allowing you to steadily invest money in Amazon stock as you add cash to your portfolio.

How much?

How much should I invest in Amazon stock?

The amount you invest in Amazon stock is up to you. However, some basic stock market guidelines are:

1. Before investing in Amazon (or any other stock), pay off high-interest loans like credit cards and build up an emergency fund that can cover several months' worth of expenses.
2. Only invest money you won't need in the next three to five years.
3. Build a diversified portfolio. The Motley Fool recommends investors expand their portfolio to about 25 stocks while not allocating more than 10% into any one position. While Amazon will likely start as a larger allocation, aim to diversify by investing in other high-quality companies in different stock market sectors.
4. Understand the risks of investing in Amazon, including the possibility that the shares could lose value (don't invest more money into Amazon than you could afford to lose).
5. Limit your investment in Amazon to a comfortable level, so you don't stress out if shares decline in value.

So, if you have $1,000 to invest right now, a good rule of thumb would be to invest about $100 into Amazon stock.

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ETF Options

How to make a stockless investment in Amazon

Many people don't have the time to invest directly into buying individual stocks like Amazon. However, they still want to invest in the company but in a more passive way.

Exchange-traded funds (ETFs) can be a great way to invest passively in Amazon stock. ETFs trade like stocks but hold shares of many companies, making them an easy way to gain broad exposure to the entire stock market or a specific stock market sector. You can buy ETFs just like you'd purchase shares of Amazon's stock, using the ETF's ticker instead of Amazon's.

According to ETF.com, 382 ETFs held 714.2 million shares of Amazon in late 2023. The SPDR S&P 500 ETF (SPY -0.07%) owned the most shares at 101.6 million. Amazon was that ETF's third-largest holding with a 3.5% portfolio weighting.

Many other ETFs have even larger portfolio allocations to Amazon. The Consumer Discretionary Select Sector SPDR Fund (XLY -0.27%) had an almost 25% portfolio weighting to Amazon stock in late 2023, making it an even better way to gain meaningful stockless exposure to Amazon.

The bottom line on investing in Amazon

Amazon is the world's second-largest retailer. It has its sights on eventually overtaking Walmart at the top, which could drive its stock price higher in the future.

Thanks to the company's recent stock split and the increasing availability of fractional share investing, it doesn't cost much money to invest in Amazon. Meanwhile, with the ease and convenience of ETFs, you don't have to invest directly in Amazon if you don't have the time -- it's easy to invest in the e-commerce giant these days.