To buy stocks, follow these key steps:
- Open a Brokerage Account
You need to open an investment account with an online brokerage. This process is similar to opening a bank account and requires personal information like your address and Social Security number. Popular brokers include Charles Schwab, Fidelity, Robinhood, and E*TRADE, many of which offer zero-commission trades and no account minimums
- Fund Your Account
Transfer money into your brokerage account from your bank account or another brokerage. This money will be used to buy stocks
- Research Stocks to Buy
Investigate companies you are interested in by reviewing their financial reports, news, and analyst insights available on your broker’s platform. Consider starting with companies you know and understand. Many brokers offer educational tools and tutorials to help you evaluate stocks
- Decide How Many Shares to Buy
You can buy whole shares or fractional shares (partial shares) if your broker offers this option. Starting small, even with a single share or fractional shares, is a good way to begin
- Place Your Order
Use your brokerage’s trading platform to place an order. You can choose a market order (buy immediately at the current price) or a limit order (buy only at a specific price or better). Brokers provide explanations for these order types to help you decide
- Consider Alternatives
If you prefer not to pick individual stocks, you can invest through stock mutual funds or ETFs, robo-advisors (which invest for you automatically), or direct stock purchase plans offered by some companies
- Monitor and Manage Your Investments
After buying stocks, keep track of your investments and adjust your portfolio as needed based on your financial goals
In summary, buying stocks involves opening and funding a brokerage account, researching and selecting stocks, deciding the quantity to purchase, and placing an order through the broker’s platform. This process is accessible to beginners thanks to many user-friendly online brokers and educational resources
