How to start investing in shares

To invest in shares, you need a brokerage account — an account with a company that buys and sells stocks on your behalf. You open the account, fund it with money, and then use the brokerage's platform to place orders to buy shares in specific companies. The brokerage holds the shares in your name and charges you a fee (either per trade, a monthly subscription, or a percentage of what you invest). Different brokerages have different minimums, fee structures, and tools, so the first step is comparing what's available where you live.

The basic sequence is: choose a brokerage, open and fund an account, research a company or index fund, place a buy order, and then monitor or hold your investment. You can sell shares whenever the market is open. Most people do not pick individual stocks; instead they buy index funds or exchange-traded funds (ETFs), which hold many stocks at once and spread your risk.

Key Takeaways

  • You need a brokerage account to buy shares; this is a company licensed to trade stocks, not a bank or investment advisor.
  • Brokerages charge fees that vary widely — some charge per trade, others charge monthly, and some charge a percentage of your balance — so compare before opening an account.
  • Most new investors buy index funds or ETFs rather than individual stocks, because they own many companies at once and require less research.
  • The money you invest can go down as well as up, and you should not invest money you need within the next few years.
  • Your country or region may have tax-advantaged accounts (like retirement accounts) that reduce what you owe on investment gains.

Choosing a brokerage and opening an account

A brokerage is a company licensed to buy and sell stocks on your behalf. It is not a bank, and it is not an investment advisor — it is a middleman that executes your orders and holds your shares. Common brokerages vary by country: in the United States, examples include Fidelity, Charles Schwab, E*TRADE, and Robinhood. In the United Kingdom, Hargreaves Lansdown and Interactive Investor are common. In Australia, Commsec and Selfwealth are widely used. Each country has its own list of regulated brokerages.

When comparing brokerages, look at: the minimum deposit required to open an account (some have none, others require hundreds of dollars), the fee structure (per-trade fees, monthly subscriptions, or percentage-based fees), whether they offer the type of account you want (standard taxable account, retirement account, or both), and the research tools and educational resources they provide. Many brokerages offer a trial or demo account so you can see the platform before funding it.

To open an account, you will need to provide your name, address, date of birth, and tax identification number (such as a Social Security number in the US). The brokerage will verify this information and may ask about your investment experience and financial situation. Once approved, you can fund the account by bank transfer, debit card, or cheque, depending on what the brokerage accepts.

Understanding stocks, index funds, and ETFs

A stock is a share of ownership in a company. When you buy one share of Apple, you own a tiny piece of Apple. The price of a stock changes based on what investors think the company is worth. If you buy at $150 and it rises to $160, you have made $10 per share (before fees and taxes). If it falls to $140, you have lost $10 per share.

An index fund is a fund that holds all the stocks in a particular index — a list of companies chosen by a set rule. The S&P 500 index, for example, holds 500 large US companies. When you buy a share of an S&P 500 index fund, you own a tiny piece of all 500 companies. If one company's stock falls, the others may rise, so your overall investment is less likely to lose money on any single day. Index funds charge a fee (called an expense ratio) that is usually very low — often between 0.03% and 0.20% per year.

An ETF (exchange-traded fund) works the same way as an index fund but trades like a stock — you can buy and sell it during market hours, and the price changes throughout the day. A mutual fund, by contrast, only trades once per day after the market closes. For most new investors, index funds and ETFs are simpler and less risky than picking individual stocks, because you own many companies at once.

How to place your first trade

Once your account is funded, log into your brokerage platform and search for the stock or fund you want to buy. You will see the current price and a buy button. Click it, enter the number of shares you want, and review the order before confirming. The order will execute immediately if the market is open (usually 9:30 AM to 4:00 PM on weekdays in the US), or it will queue for the next market open if you place it after hours.

You can place different types of orders. A market order buys at the current price right away. A limit order lets you set a maximum price you are willing to pay — if the stock is $100 and you set a limit of $98, the order will only execute if the price drops to $98 or lower. Limit orders are useful if you want to avoid overpaying, but they may never execute if the price never reaches your limit.

After you buy, the shares appear in your account. You can hold them, sell them, or buy more. Most brokerages show you the current value of your holdings and let you see your gain or loss in dollars and as a percentage. Remember that this value changes constantly while the market is open.

Fees, taxes, and costs to understand

Brokerages make money by charging you. The most common fee structures are: per-trade fees (you pay a flat amount each time you buy or sell, ranging from $0 to $10 or more), monthly subscription fees (you pay a flat amount per month regardless of how much you trade), and percentage-based fees (you pay a small percentage of your account balance each year, usually 0.5% to 2%). Some brokerages charge no trading fees but make money through other means, such as lending out your shares or offering premium services.

Beyond brokerage fees, you will owe taxes on your gains. If you buy a stock for $100 and sell it for $150, you have a $50 gain, and you will owe tax on that $50 (the amount varies by country and how long you held it). In the US, gains held for less than a year are taxed as ordinary income; gains held for more than a year get a lower rate called long-term capital gains tax. In the UK, you have an annual capital gains tax allowance before you owe anything. Different countries have different rules, so research your local tax treatment before you start.

Some countries offer tax-advantaged accounts that reduce or delay the tax you owe. In the US, a 401(k) or IRA lets you invest money before tax is taken out, so you pay tax only when you withdraw in retirement. In the UK, an ISA (Individual Savings Account) lets you hold investments tax-free. These accounts often have limits on how much you can contribute per year and rules about when you can withdraw, so check whether you are may be able to access and whether it makes sense for your situation.

Risk and how much to invest

Stock prices go up and down. Over very long periods (20+ years), stock markets have historically risen, but over short periods (days, months, or even years), they can fall sharply. If you invest $1,000 and the market drops 20%, your account is worth $800. If you need that money in six months, you may have to sell at a loss. If you can wait 10 years, you have time to recover from downturns.

A common rule is: do not invest money you will need within the next three to five years. If you are saving for a house down payment in two years, a stock market investment is too risky — keep that money in a savings account instead. If you are saving for retirement 30 years away, stocks are usually a good choice because you have time to ride out the ups and downs.

Start small if you are new to investing. Many brokerages let you buy fractional shares, so you can invest $50 or $100 instead of waiting until you have enough for a full share. This lets you learn how the platform works and get comfortable with seeing your money go up and down without risking a large amount.

Research tools and learning resources

Before you buy a stock or fund, research it. Most brokerages provide free research tools: company financial statements, analyst ratings, news feeds, and charts showing the stock's price history. Financial websites like Yahoo Finance, Google Finance, and your country's equivalent offer free data and analysis. Read the company's annual report (called a 10-K in the US) to understand what it does and how it makes money.

For index funds and ETFs, look at the fund's fact sheet, which shows what companies it holds, its expense ratio, and how it has performed over the past one, five, and ten years. Past performance does not may provide future results, but it shows you whether the fund has been stable or volatile. Compare similar funds — if two S&P 500 index funds exist, pick the one with the lower expense ratio, because that fee compounds over time.

Many brokerages offer free educational content: video tutorials, articles, and webinars about how to invest. Use these to build your knowledge before you risk real money. Some brokerages also offer paper trading (a simulator where you practice buying and selling with fake money) so you can learn the platform without any risk.

Frequently Asked Questions

How much money do I need to start investing in shares?

It depends on the brokerage. Some have no minimum deposit, while others require $500 to $2,500 to open an account. Many brokerages now offer fractional shares, so you can invest $10 or $50 in a stock or fund even if a full share costs more. Start with whatever amount you can afford to lose without hardship.

Can I lose more money than I invest?

If you buy stocks or funds outright (not on margin or with borrowed money), the worst that can happen is the investment goes to zero and you lose what you put in. You cannot lose more than your initial investment. However, if you borrow money from your broker to buy stocks (called margin trading), you can lose more than you invested, so avoid this as a new investor.

Should I pick individual stocks or buy index funds?

Most new investors should start with index funds or ETFs. They require less research, spread your risk across many companies, and have lower fees. Individual stock picking requires significant research and time, and most professional investors do not beat the market consistently. Once you have experience and understand how markets work, you can experiment with individual stocks if you want.

When should I sell a stock or fund I own?

This depends on your goals. If you are investing for retirement decades away, you may never sell — you just hold and reinvest dividends. If you are saving for a specific goal (a house, a car), sell when you need the money. If you bought a stock and the company's situation has changed for the worse, selling to cut your losses may make sense. Avoid selling just because the price dropped temporarily; market downturns are normal.

Do I need an investment advisor or can I do this myself?

You can do it yourself using a brokerage platform. Many people start this way and learn as they go. If you want professional guidance, you can hire a financial advisor, but they charge fees (usually 0.5% to 2% of your assets per year) and may not be worth it if you have a small amount to invest. Some brokerages offer robo-advisors — automated services that build and manage a portfolio for you based on your goals and risk tolerance, usually for lower fees than a human advisor.