You need a brokerage account, money to invest, and about 10 minutes to place your first trade

Buying a stock means purchasing a small ownership share in a company. To do it, you open an account with a brokerage firm (a company licensed to buy and sell stocks on your behalf), deposit money, search for the stock you want, and place an order. The whole process from account opening to owning shares typically takes a few days, though the actual trade itself happens in seconds.

The main decision is which brokerage to use. Most charge no commission on stock trades anymore, so the differences come down to the account types they offer, how their website or app works, and what research tools they provide. Common brokerages include Fidelity, Charles Schwab, E-Trade, Robinhood, and Webull, but there are dozens of others. Your bank may also offer brokerage services.

Key Takeaways

  • You must open a brokerage account and pass identity verification before you can buy any stock, which usually takes one to three business days.
  • Most brokerages charge no commission per trade, but you pay the actual price of the stock plus any bid-ask spread at the moment you buy.
  • A market order buys immediately at the current price; a limit order waits to buy only if the price drops to your target, and may never fill.
  • Stocks bought in a regular taxable account are subject to capital gains tax when you sell; stocks in a retirement account like an IRA have different tax rules.
  • You can buy a single share of most stocks today, so you do not need thousands of dollars to start.

Opening a brokerage account and funding it

Choose a brokerage and go to their website or download their app. Click the button to open a new account — most brokerages call this "Open an Account" or "get your free guide." You will enter your name, address, Social Security number, and employment information. The brokerage verifies your identity electronically, which usually takes a few minutes to a few hours, though it can take up to three business days.

Once your account is approved, you link a bank account or transfer money in. Most brokerages let you link your checking or savings account directly and move money electronically, which typically takes one to three business days. Some also accept wire transfers, which are faster but may cost a fee. You do not need to deposit a large amount — many brokerages have no minimum, and you can start with whatever you can afford.

Finding and researching a stock before you buy

Once your account is funded, you search for a stock using its ticker symbol — a one- to five-letter code that identifies the company. Apple is AAPL, Microsoft is MSFT, Tesla is TSLA. You can find a company's ticker by searching its name on the brokerage's website or on a financial site like Yahoo Finance or Google Finance.

Most brokerages show you the current price, recent price history as a chart, and basic information like the company's market value and dividend (if it pays one). Many also provide links to news articles, analyst ratings, and financial statements. Read what you can, but understand that a brokerage's research tools are informational only — they do not tell you whether to buy or sell. That decision is yours alone.

Placing your first stock order

Click on the stock you want and select "Buy." You will see a form asking how many shares you want and what type of order to place. The two most common types are a market order and a limit order.

A market order buys immediately at whatever the stock costs right now. If you place a market order for Apple at 10 a.m. and Apple is trading at $150, you will pay $150 per share (plus any fees). The trade executes in seconds during market hours (9:30 a.m. to 4 p.m. Eastern time on weekdays). A limit order lets you set a maximum price you are willing to pay — for example, "buy Apple only if it drops to $145." If the price never reaches $145, your order never fills and you own no shares.

Enter the number of shares and review the total cost. Most brokerages show you an estimate of what you will pay, including any bid-ask spread (the tiny difference between what buyers offer and what sellers ask). Then confirm the order. You will see a confirmation number, and the shares should appear in your account within seconds to a few minutes.

Understanding account types and taxes

Most people start with a taxable brokerage account, which has no contribution limits and no restrictions on when you can withdraw money. When you sell a stock for more than you paid, you owe capital gains tax on the profit. Short-term gains (stocks held less than a year) are taxed as ordinary income. Long-term gains (stocks held a year or more) usually have a lower tax rate.

If you have earned income, you can also open an Individual Retirement Account (IRA) and buy stocks inside it. Traditional IRAs and Roth IRAs have annual contribution limits (for 2024, the limit is $7,000 for people under 50), but the stocks grow tax-deferred or tax-free depending on the account type. You cannot withdraw money penalty-free until age 59½ in most cases. Many people use both a taxable account and an IRA.

What happens after you buy

Once you own shares, you can watch their price change during market hours. Your brokerage shows your account balance, which includes the current value of your stocks plus any cash you have not invested. The price will go up and down every trading day — this is normal and does not mean you have made or lost money until you sell.

If the company pays a dividend (a cash payment to shareholders), it will be deposited into your account automatically. You can reinvest it by buying more shares, or leave it as cash. You can sell your shares anytime the market is open by clicking "Sell," choosing how many shares, and confirming. The money from the sale appears in your account within one to three business days.

Common mistakes to avoid

Do not invest money you will need within the next few years. Stock prices fluctuate, and if you need the money in six months and the price has dropped, you will lock in a loss. Stocks are best for money you can leave alone for at least five to ten years.

Do not buy a stock just because someone on social media or a friend recommended it. Do your own research or consider a low-cost index fund instead, which owns hundreds of stocks and spreads your risk. Do not use a market order if you are buying during the first or last hour of the trading day, when prices are most volatile — a limit order gives you more control.

Do not assume that a low stock price means a good deal. A $10 stock is not cheaper than a $100 stock if the $10 company is worth less overall. Look at the company's market value (total value of all its shares), not just the price per share.

Frequently Asked Questions

How much money do I need to start buying stocks?

Most brokerages have no minimum deposit, and you can buy fractional shares of almost any stock. You could start with $10, $50, or $100. The only real limit is what you can afford to invest without needing the money soon. Starting small and adding more over time is a common approach.

Can I buy stocks outside of market hours?

Market orders only execute during regular market hours (9:30 a.m. to 4 p.m. Eastern, Monday through Friday). 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. Most beginners should stick to regular hours.

What is the difference between a stock and a mutual fund?

A stock is one company. A mutual fund or index fund is a collection of many stocks bundled together and managed as one investment. Funds spread your risk across many companies, while individual stocks concentrate it in one. Many beginners find funds simpler because they require less research.

Do I have to pay taxes on stocks I own but have not sold?

No. You only owe tax when you sell a stock for a profit (capital gains tax). While you own the stock, there is no tax, even if the price goes up. If the company pays a dividend, you owe tax on that dividend in the year you receive it, whether or not you sell the stock.

What if I want to sell a stock but the market is closed?

You can place a sell order anytime, but it will not execute until the market opens. If you place a market sell order after 4 p.m., it will sell at whatever price the stock opens at the next morning, which could be higher or lower than the previous close. Use a limit order if you want to control the price.