You can buy stocks through a brokerage account, either online or with a traditional broker

A brokerage is a company that holds your money and executes trades on your behalf. You open an account with them, deposit cash, and then use their platform to buy and sell stocks. Most brokerages today are online-only and charge little or nothing per trade. Some offer mobile apps; others work through a website. A few traditional brokerages still operate with phone lines and in-person offices, but they typically charge higher fees.

The brokerage holds your stocks in your name and sends you tax documents at year-end. They do not own your shares — you do. If the brokerage fails, your account is protected by the Securities Investor Protection Corporation (SIPC) up to $500,000 per account type (cash and margin accounts are separate).

You do not need a broker's permission or a minimum amount of money to start, though some brokerages set their own minimums. Many now allow you to buy fractional shares, meaning you can invest $10 or $100 instead of waiting to afford a full share.

Key Takeaways

  • Online brokerages like Fidelity, Charles Schwab, and E*TRADE let you open an account in minutes and start trading the same day or the next business day.
  • Most online brokerages charge zero commission per trade and have no account minimums, though some offer premium features for a monthly fee.
  • You can also buy stocks through a robo-advisor (an automated investment service) or directly from a company's investor relations website, though these routes are less common for individual stock picking.
  • Your brokerage account is separate from your bank account; you must transfer money from your bank to your brokerage before you can buy stocks.
  • SIPC insurance protects your account up to $500,000 if your brokerage fails, but it does not protect you from losses if a stock price falls.

Major online brokerages and what they offer

Fidelity is one of the largest brokerages in the United States. It offers zero-commission stock trades, no account minimum, and a full suite of research tools. You can open an account online and fund it from your bank account. Fidelity also offers retirement accounts (IRAs and 401(k) rollovers), which many people use alongside a regular brokerage account.

Charles Schwab operates similarly — zero commissions, no minimum, and a strong research platform. Schwab acquired TD Ameritrade in 2020 and has been consolidating their platforms. If you already have a TD Ameritrade account, you can keep it or move to Schwab's platform.

E*TRADE (owned by Morgan Stanley) also charges zero commissions and has no account minimum. It is known for educational content and a mobile app that many traders prefer.

Webull and Robinhood are newer, app-first brokerages aimed at younger investors. Both offer zero commissions and fractional shares. Robinhood became well-known during the 2021 meme stock events; Webull is less widely known but operates similarly. Both have faced regulatory scrutiny over their business practices, so research their current standing before opening an account.

Interactive Brokers caters to active traders and offers lower fees for high-volume trading, but has a steeper learning curve and a $500 account minimum.

How to open a brokerage account

The process is straightforward and takes 10 to 20 minutes. You will need your Social Security number, a valid ID, your address, and your bank account information. Most brokerages ask for your employment status and annual income to comply with regulations, but they do not reject you for being unemployed or having low income.

After you submit your application, the brokerage verifies your identity (usually instantly or within a few hours). You then link a bank account or transfer money from an existing account. Some brokerages offer a debit card or check-writing feature, but most require you to initiate a transfer from your bank.

Once your cash arrives in your brokerage account, you can place an order to buy a stock. The order executes during market hours (9:30 a.m. to 4 p.m. Eastern Time on weekdays). If you place an order after hours or on a weekend, it waits until the market opens the next business day.

Robo-advisors and other ways to buy stocks

A robo-advisor is a service that invests your money automatically based on your age, risk tolerance, and goals. Examples include Betterment, Wealthfront, and Vanguard Personal Advisor Services. You deposit money, answer a questionnaire, and the robo-advisor buys a mix of stocks and bonds for you. You do not pick individual stocks; instead, you own a diversified portfolio.

Robo-advisors charge a management fee (typically 0.25% to 0.50% of your account balance per year) and are best for people who want a hands-off approach. If you want to pick individual stocks yourself, a regular brokerage is cheaper.

Some companies allow you to buy their stock directly through a Dividend Reinvestment Plan (DRIP) or direct stock purchase plan. You contact the company's investor relations department, enroll, and send them money. This route is rare now because online brokerages are so easy to use, but it can work if you want to own just one or two stocks and avoid brokerage fees entirely.

Understanding account types and tax implications

A standard brokerage account (also called a taxable account) has no contribution limits and no restrictions on when you can withdraw money. You pay taxes on dividends and capital gains each year, whether you sell or not. This is the most common type for buying individual stocks.

An Individual Retirement Account (IRA) is a tax-advantaged account designed for retirement savings. You can hold stocks inside an IRA, and the tax treatment depends on the type: a Traditional IRA lets you deduct contributions now and pay taxes when you withdraw in retirement; a Roth IRA lets you contribute after-tax money and withdraw tax-free in retirement. IRAs have annual contribution limits (currently $7,000 for people under 50) and penalties if you withdraw before age 59½.

Most people use a standard brokerage account for stock picking and an IRA for long-term retirement investing. You can have both at the same brokerage.

Fees and costs to watch for

Commission per trade is now zero at most major brokerages, so that is not a concern. However, other costs exist:

  • Margin interest: If you borrow money from your brokerage to buy stocks (called buying on margin), you pay interest on the borrowed amount. This is optional and not recommended for beginners.
  • Inactivity fees: Some brokerages charge a small fee if your account sits unused for a long time. Most major brokerages have eliminated this, but check the fine print.
  • Wire transfer fees: Moving money out of your brokerage account to your bank may cost $10 to $25. Transferring to another brokerage is usually free.
  • Account maintenance fees: A few brokerages charge a monthly or annual fee unless you meet a minimum balance. This is rare among the major players.
  • Bid-ask spread: When you buy or sell a stock, there is a small difference between the price you pay and the price you receive. This is not a fee charged by the brokerage; it is the cost of the market itself. For popular stocks, the spread is tiny (a penny or less). For obscure stocks, it can be larger.

What to consider when choosing a brokerage

If you are just starting out, the differences between major brokerages matter less than you might think. Fidelity, Schwab, and E*TRADE all offer zero commissions, no minimums, and solid platforms. Pick one and open an account. You can always move your stocks to another brokerage later if you want to.

If you plan to trade frequently or use advanced tools, look at the research and charting features each platform offers. If you want a simple mobile app and do not care about research, Robinhood or Webull might appeal to you. If you want a hands-off approach, a robo-advisor removes the decision-making.

One practical consideration: customer service. If you run into a problem, can you reach someone by phone? Most online brokerages offer phone support during market hours, but response times vary. Read recent reviews to see what others report.

Frequently Asked Questions

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

No. Most brokerages have no account minimum, and many allow fractional shares, so you can invest $1, $10, or $100. The only limit is how much you have available to transfer from your bank.

How long does it take to buy a stock after I open an account?

If you open an account during market hours and transfer money from your bank the same day, you can place a trade the same day or the next business day. Bank transfers usually take one to three business days to arrive at your brokerage, so plan accordingly.

Can I lose more money than I invested?

In a standard brokerage account, no — your loss is limited to what you put in. If you buy stocks on margin (borrowing money from your brokerage), you can lose more than your initial investment, but this is optional and not recommended for beginners.

What happens to my stocks if my brokerage goes out of business?

Your stocks are protected by SIPC insurance up to $500,000 per account type. The brokerage does not own your shares; you do. If the firm fails, your account transfers to another brokerage and you keep your stocks.

Can I buy stocks from outside the United States?

Most U.S. brokerages require you to be a U.S. citizen or resident with a valid Social Security number or Individual Taxpayer Identification Number. Some brokerages serve international clients, but they are less common. Check with your chosen brokerage about their requirements.