You need a brokerage account, money to invest, and a decision about which stocks to buy

Buying stocks means opening an account with a brokerage firm, depositing money, and placing an order to purchase shares of a company. The brokerage holds your account, executes your trades, and keeps records for taxes. You can open an account online in under an hour. Most brokerages have no minimum deposit requirement anymore, though some still require $500 to $2,500 to start. The money sits in your account until you decide to buy.

The actual purchase happens through your brokerage's website or app. You search for a stock by its ticker symbol (a short code like AAPL for Apple or MSFT for Microsoft), decide how many shares you want, and submit the order. The brokerage finds a seller and completes the transaction, usually within seconds during market hours. You own the shares immediately and can sell them anytime the market is open.

Key Takeaways

  • You must open a brokerage account before you can buy stocks; popular options include Fidelity, Charles Schwab, E-Trade, and Robinhood, all of which allow online account setup.
  • Most brokerages charge no commission on stock trades, but you pay the difference between the bid and ask price, called the spread, which is built into every transaction.
  • Stock markets are open Monday through Friday, 9:30 a.m. to 4 p.m. Eastern Time; orders placed outside these hours execute at the next market open.
  • You can buy as few as one share of most stocks, so you do not need thousands of dollars to start investing.
  • Your brokerage sends you tax documents (Form 1099) each January for any dividends or capital gains you earned the previous year.

Opening a brokerage account

A brokerage is a company licensed to buy and sell stocks on your behalf. You choose one, create an account online, and link a bank account to transfer money in. The process takes 10 to 20 minutes. You will need your Social Security number, a government ID, your address, and employment information. The brokerage verifies your identity electronically and usually approves you the same day.

Common brokerages include Fidelity, Charles Schwab, E-Trade, Robinhood, TD Ameritrade, and Interactive Brokers. Each has a different interface and fee structure, but all allow you to buy individual stocks. Some are better for beginners (Fidelity and Schwab offer extensive educational resources), while others focus on active traders. Read reviews or try a demo account before committing, but the choice matters less than actually starting.

Once your account is open, you transfer money from your bank. This usually takes one to three business days. Some brokerages let you trade immediately with unsettled funds, while others require the transfer to complete first. Check your brokerage's policy before you deposit.

How to place a stock order

Log into your brokerage account and look for a "Trade" or "Buy" button. Search for the stock using its ticker symbol — you can find this by searching the company name online. When you find it, the app or website shows you the current price, recent performance, and company information.

Enter the number of shares you want to buy. If a stock costs $100 per share and you want to spend $500, you buy 5 shares. You can buy fractional shares (0.5 shares, 2.3 shares) on most modern brokerages, so you do not need to wait until you have enough for a whole share. Choose your order type: a market order buys at the current price immediately, while a limit order buys only if the price drops to a level you set. Market orders are simpler for beginners. Review the order summary and confirm.

The trade executes within seconds during market hours (9:30 a.m. to 4 p.m. Eastern, Monday through Friday). Your account shows the shares immediately. If you place an order after market close or on a weekend, it queues and executes at the next market open.

Understanding costs and fees

Most brokerages charge zero commission on stock trades, meaning you do not pay a flat fee per transaction. However, you still pay the spread — the difference between what buyers are willing to pay (the bid) and what sellers are asking (the ask). This spread is built into the price you see and is typically a few cents per share. On a $100 stock, the spread might be $99.98 to $100.02. You pay the ask price when you buy and receive the bid price when you sell.

Some brokerages charge account maintenance fees if your balance falls below a minimum, though this is rare now. Others charge for margin accounts (borrowing money to invest) or for certain advanced features. Read your brokerage's fee schedule before opening an account. For a beginner buying individual stocks, the main cost is the spread, which is unavoidable.

If your stock pays a dividend (a cash payment to shareholders), the brokerage deposits it into your account automatically. You do not pay a fee for this. When you sell a stock, you may owe capital gains tax if the stock increased in value; your brokerage reports this to the IRS on Form 1099, but does not collect the tax itself.

Choosing which stocks to buy

Research is the foundation of stock selection. Read the company's annual report (Form 10-K, filed with the SEC), financial news sites like Yahoo Finance or Seeking Alpha, and analyst reports. Look at the company's revenue, profit, debt, and growth rate. Compare these numbers to competitors in the same industry. This research takes time and is not a substitute for professional advice.

Beginners often start by buying stocks in companies they know — Apple, Microsoft, Coca-Cola — because they understand the business. This is a reasonable starting point, though it is not a strategy. Many investors buy index funds or exchange-traded funds (ETFs) instead of individual stocks, because they spread your money across many companies and reduce risk. An ETF that tracks the S&P 500, for example, owns pieces of 500 large companies with one purchase.

Never invest money you cannot afford to lose. Stock prices fluctuate daily, and you can lose your entire investment if the company fails. Start small, learn as you go, and consider speaking with a financial advisor before investing a large sum.

What happens after you buy

Your brokerage sends you a confirmation email with the trade details: the stock symbol, number of shares, price per share, and total cost. The shares appear in your account immediately and are yours to hold or sell. You can check your account balance and holdings anytime through the app or website.

If the stock price rises, your account value increases. If it falls, your account value decreases. You do not realize a gain or loss until you sell. If you sell for more than you paid, you owe capital gains tax on the profit. If you sell for less, you can deduct the loss on your taxes (subject to limits). Your brokerage tracks all of this and sends you a tax form (1099) each January.

You can sell your shares anytime the market is open by clicking "Sell" in your account, entering the number of shares, and confirming. The money returns to your brokerage account within one to three business days, and you can withdraw it to your bank account or use it to buy other stocks.

Common mistakes to avoid

Do not invest money you need soon. Stock prices can drop 20, 30, or 50 percent in a year. If you need the money in the next two to five years, keep it in a savings account or money market fund instead. Do not buy a stock because a friend recommended it or because you saw it trending on social media. Do your own research or speak with a financial advisor.

Do not try to time the market by buying low and selling high. Professional investors with decades of experience fail at this regularly. A simpler approach is to invest a fixed amount every month (called dollar-cost averaging) regardless of the price. This removes emotion from the decision and often produces better results over time.

Do not buy on margin (borrowed money) until you understand how it works. Margin amplifies both gains and losses. If your stock drops and you borrowed money to buy it, you can lose more than you invested. Beginners should use only their own cash.

Frequently Asked Questions

Do I need a lot of money to start buying stocks?

No. Most brokerages have no minimum deposit, and you can buy fractional shares, so you can invest $10, $50, or $100 to start. The amount does not matter as much as beginning and learning as you go. Many brokerages also offer paper trading (practice with fake money) so you can learn without risk.

What is the difference between a market order and a limit order?

A market order buys immediately at the current price. A limit order buys only if the price drops to a level you set. Market orders are faster and simpler for beginners. Limit orders give you control over price but may never execute if the stock does not reach your target price.

Can I buy stocks outside of market hours?

You can place an order anytime, but it will not execute until the market opens. The stock market is open Monday through Friday, 9:30 a.m. to 4 p.m. Eastern Time. Some brokerages offer extended-hours trading (before 9:30 a.m. or after 4 p.m.), but prices are less stable and spreads are wider during these times.

How do I know if a stock is a good investment?

Read the company's financial statements, compare its performance to competitors, and understand the industry. Look at revenue growth, profit margins, and debt levels. If you are unsure, consider starting with index funds or ETFs, which spread your money across many companies and reduce the risk of picking a bad stock.

What happens if the company goes bankrupt?

If you own stock in a company that goes bankrupt, your shares become worthless and you lose your investment. This is why diversification matters — owning many stocks or funds reduces the impact of any single company failing. Your brokerage does not protect you from this loss.