You need a brokerage account, money to invest, and a decision about which stocks to buy
Buying stock means purchasing a small piece of ownership in a company. To do it, you open an account with a brokerage — a firm licensed to buy and sell stocks on your behalf. You fund that account with money, search for the stock you want by its ticker symbol (a short code like AAPL for Apple), enter how many shares you want, and confirm the purchase. The stock then appears in your account, and you own it until you sell it.
The entire process from account opening to your first purchase typically takes three to five business days, though some brokerages now let you trade the same day you fund the account. You do not need a large amount of money to start — many brokerages have no minimum deposit, and individual stocks can cost anywhere from a few dollars to several hundred dollars per share.
Key Takeaways
- You must open a brokerage account with a licensed firm, fund it with your own money, and verify your identity before you can buy any stock.
- Stock prices change throughout each trading day, and the price you see on your screen may not be the price you actually pay if you place an order during market hours.
- You can buy stocks through a full-service brokerage (which charges fees for advice), a discount brokerage (lower fees, you make your own decisions), or a fractional share platform (lets you buy partial ownership for small amounts).
- Once you own a stock, you are responsible for tracking its performance, deciding when to sell, and reporting any gains or losses on your taxes.
Opening a brokerage account and proving who you are
Start by choosing a brokerage and visiting their website or app. You will enter your name, address, Social Security number, and employment information. The brokerage runs a background check and verifies your identity — this is a legal requirement called Know Your Customer (KYC). The process usually takes a few minutes to a few hours.
After verification, you link a bank account to your brokerage account so you can transfer money in. Most brokerages let you link via online banking (you enter your bank login credentials) or by providing your routing and account numbers. Once linked, you can transfer money immediately, though it typically takes one to three business days for the money to appear in your brokerage account and be available to trade.
Some brokerages require a minimum deposit to open an account; others do not. Check the specific brokerage's requirements before you start. If you are under 18, you will need a parent or guardian to open a custodial account on your behalf.
Finding and researching a stock before you buy
Once your account is funded, search for a stock using its ticker symbol — a one- to five-letter code assigned to every publicly traded company. You can find ticker symbols by searching the company name on your brokerage's platform, on financial websites like Yahoo Finance or Google Finance, or through the Securities and Exchange Commission (SEC) website. For example, Microsoft's ticker is MSFT and Tesla's is TSLA.
When you pull up a stock, you will see its current price, how much it has moved today, charts showing its price history, and basic company information. Read the company's recent earnings reports and news to understand what the business does and whether its stock price has been rising or falling. Many brokerages also provide analyst ratings and research reports written by financial professionals, though remember that these are opinions, not guarantees about future performance.
Do not buy a stock simply because you heard about it or because someone recommended it. Spend time understanding what the company does, how it makes money, and whether you believe its stock price will go up or down over the time period you plan to hold it.
Placing your first stock order
When you are ready to buy, click the "Buy" button next to the stock's name in your brokerage account. You will be asked how many shares you want to purchase. Enter that number and review the total cost — the number of shares multiplied by the current stock price, plus any trading fees (many brokerages now charge zero commission, but some still do).
You will then choose an order type. A market order buys the stock immediately at whatever the current market price is — this is the simplest option for beginners. A limit order lets you set a maximum price you are willing to pay; the order only goes through if the stock drops to that price or lower. Limit orders can take days or weeks to fill, or may never fill at all if the price never reaches your limit.
After you confirm, the order is sent to the stock exchange. During market hours (9:30 a.m. to 4 p.m. Eastern time on weekdays), your order typically fills within seconds. Outside market hours, your order waits until the market opens the next trading day. Once filled, the stock appears in your account and you own it.
Different types of brokerages and what they cost
| Brokerage Type | How It Works | Cost | Best For |
|---|---|---|---|
| Discount Brokerage | You research and decide what to buy; the brokerage executes your trades | Zero commission per trade; may charge for research or premium features | Self-directed investors who want low fees |
| Full-Service Brokerage | A broker or financial advisor recommends stocks and manages your account | Commission per trade plus advisory fees (often 0.5% to 2% of assets per year) | Investors who want personalized guidance |
| Fractional Share Platform | You can buy a portion of a stock instead of a whole share | Zero commission; some charge monthly subscription for premium features | Beginners with small amounts of money |
| Robo-Advisor | An automated system builds and manages a diversified portfolio based on your goals | Advisory fee (typically 0.25% to 0.50% of assets per year) | Hands-off investors who want a managed portfolio |
Most beginners start with a discount brokerage because commissions are zero and the interface is straightforward. Popular discount brokerages include Fidelity, Charles Schwab, E-Trade, and TD Ameritrade. Fractional share platforms like M1 Finance and Webull let you invest small amounts by buying partial shares, which is useful if you want to own a stock that costs $500 per share but only have $100 to invest.
Full-service brokerages charge higher fees but assign you a broker who makes recommendations and manages your portfolio for you. Robo-advisors are automated services that build a diversified portfolio based on your risk tolerance and goals, then rebalance it automatically over time. Choose based on how much guidance you want and how much you are willing to pay.
What happens after you buy: holding, selling, and taxes
After you purchase a stock, you own it until you decide to sell it. You can hold it for days, months, years, or indefinitely. Your brokerage account will show you the current value of your shares (the number of shares multiplied by today's stock price) and whether you have made or lost money since you bought it.
When you want to sell, click the "Sell" button next to the stock in your account, enter how many shares you want to sell, and confirm. The sale typically completes within seconds during market hours. The money from the sale appears in your brokerage account as cash, which you can then withdraw to your bank account or use to buy other stocks.
Any profit you make when you sell is taxable income. If you held the stock for less than one year, it is taxed as short-term capital gains at your ordinary income tax rate. If you held it for one year or longer, it is taxed as long-term capital gains at a lower rate (0%, 15%, or 20% depending on your income). Your brokerage will send you a tax form (Form 1099-B) at the end of the year showing all your sales and gains or losses. You report this on your tax return.
Common mistakes to avoid when buying stocks
Do not invest money you cannot afford to lose. Stock prices go down as well as up, and you could end up with less money than you started with. Never borrow money to buy stocks unless you fully understand the risks.
Do not buy a stock based on a tip from a friend, a social media post, or a celebrity endorsement. These are often unreliable and sometimes illegal (if someone is paid to promote a stock without disclosing it). Do your own research or work with a licensed financial advisor.
Do not panic-sell when a stock drops in price. Short-term price swings are normal. If you believe in the company's long-term prospects, holding through downturns is often the right move. Conversely, do not hold a stock just because you are waiting to break even — if your reasons for owning it have changed, sell it and move on.
Do not forget to track your purchases for taxes. Your brokerage keeps records, but you should too. Save your purchase and sale confirmations, and understand whether your gains are short-term or long-term before you file your taxes.
Frequently Asked Questions
Can I buy stocks with a small amount of money?
Yes. Many brokerages have no minimum deposit, and fractional share platforms let you buy partial shares for as little as $1. If a stock costs $200 per share and you only have $50, you can buy 0.25 shares. You own that fractional piece and benefit if the stock price rises.
What is the difference between a market order and a limit order?
A market order buys immediately at the current price, which is usually within seconds. A limit order sets a maximum price you will pay and only buys if the stock drops to that price. Limit orders can take days to fill or may never fill if the price never reaches your limit. Use market orders for speed; use limit orders if you want to control the price you pay.
Do I have to pay taxes on stocks I own but have not sold?
No. You only owe taxes when you sell a stock and realize a gain or loss. If you own a stock that has gone up in value but you have not sold it, you do not owe taxes yet. You will owe taxes only when you sell.
What happens if the company I own stock in goes bankrupt?
If a company goes bankrupt, your stock may become worthless and you could lose your entire investment. This is why diversifying — owning many different stocks instead of just one — is important. It reduces the damage if one company fails.
Can I buy stocks outside of market hours?
You can place orders outside market hours (before 9:30 a.m. or after 4 p.m. Eastern time), but they will not fill until the market opens. Some brokerages offer extended-hours trading, which lets you trade before or after regular hours, but prices are often less stable and spreads (the difference between buy and sell prices) are wider.