You can buy stocks through an online brokerage — a company that holds your money and executes trades on your behalf
An online brokerage is a financial firm that lets you open an account, deposit money, and buy or sell stocks through their website or app. You do not buy stocks directly from a company; you buy them through a broker who connects you to the market. The broker holds your cash and your shares, charges you fees (which vary widely), and provides the platform where you place orders.
The main brokerages available to individual investors in the United States include Fidelity, Charles Schwab, E*TRADE, TD Ameritrade, Robinhood, Webull, and Interactive Brokers, among others. Each one operates differently: some charge per trade, some charge nothing per trade but make money other ways, some require minimum account balances, and some do not. Your choice depends on how much money you have to start, how often you plan to trade, what tools you want, and what fees matter most to you.
Key Takeaways
- You need to open an account with an online brokerage, provide identification and tax information, and link a bank account before you can buy your first stock.
- Most major brokerages no longer charge per-trade commissions, but they make money through other fees like margin interest, account inactivity fees, or by selling order flow data.
- The account type you choose — standard taxable account versus IRA — determines how your gains are taxed and whether there are withdrawal limits.
- Minimum account balances range from zero dollars at some brokerages to $2,500 or more at others, and some charge monthly fees if you fall below a threshold.
How to open an account and what you need
Opening an account takes 10 to 20 minutes online. You will need your Social Security number, a government-issued ID, your current address, and information about your employment or income. The brokerage will ask you to verify your identity — some do this instantly through a third-party service, others mail you a code or call you.
After your identity is verified, you link a bank account so you can transfer money in and out. This usually takes one to three business days. Some brokerages let you start trading before the bank link is fully confirmed, but your ability to withdraw money may be limited until it clears. Once your bank account is linked and you have deposited money, you can place your first stock order immediately.
Account types: taxable accounts versus retirement accounts
Most brokerages offer two main types of accounts. A standard taxable account (sometimes called a cash account) has no contribution limits, no withdrawal restrictions, and no tax advantages — you pay capital gains tax on profits when you sell. An IRA (Individual Retirement Account) lets you contribute a limited amount per year (the limit changes annually), and you do not pay tax on gains until you withdraw money in retirement, but you cannot withdraw without penalty before age 59½.
If you are just starting out and do not have much money, a taxable account is simpler. If you want to save for retirement and reduce your current tax bill, an IRA may make more sense. Some people open both. The brokerage will walk you through which type to choose when you sign up, and you can usually open multiple accounts later.
Comparing fees and what they actually cost you
Most major brokerages charge zero dollars per stock trade. This was not true 10 years ago — trades used to cost $5 to $10 each — but competition has eliminated per-trade commissions at firms like Fidelity, Schwab, and E*TRADE. However, brokerages still make money, and you should know how.
Some charge a monthly account fee if your balance falls below a minimum (often $2,500 to $10,000). Some charge interest if you borrow money to buy stocks (called margin interest). Some charge fees to transfer your account to another brokerage. Some make money by selling information about your trades to other firms (called payment for order flow). Read the fee schedule on the brokerage website before you open an account — the specific fees vary, and they add up if you trade frequently or keep a small balance.
Differences between brokerages for beginners
| Brokerage | Minimum to open | Per-trade commission | Monthly fee | Best for |
|---|---|---|---|---|
| Fidelity | $0 | $0 | $0 | Beginners; good research tools |
| Charles Schwab | $0 | $0 | $0 | Beginners; strong customer service |
| E*TRADE | $0 | $0 | $0 | Beginners; educational resources |
| Robinhood | $0 | $0 | $0 | Mobile-first traders; fractional shares |
| Interactive Brokers | $0 | $0 | $10/month (waived if balance over $100k) | Active traders; advanced tools |
For someone buying a few stocks and holding them, Fidelity, Schwab, and E*TRADE are the most straightforward choices. All three have zero minimums, zero per-trade fees, and zero monthly fees. Robinhood appeals to people who want a very simple mobile app and the ability to buy fractional shares (a piece of a stock, not a whole share). Interactive Brokers is built for people who trade frequently and want advanced tools; the $10 monthly fee is waived if you keep $100,000 or more in the account.
The right choice depends on what matters to you. If you want educational content and research tools, E*TRADE and Fidelity both offer extensive learning resources. If you prioritize customer service by phone, Charles Schwab is known for responsive support. If you want to trade only on your phone with minimal complexity, Robinhood is designed for that. Spend 15 minutes on each brokerage's website to see which interface feels most natural to you.
What happens after you place an order
When you enter a buy order for a stock, the brokerage sends it to an exchange (like the New York Stock Exchange or NASDAQ). The order is filled when a seller agrees to sell at your price. Most stock orders are filled within seconds during market hours (9:30 a.m. to 4 p.m. Eastern time, Monday through Friday). If you place an order after market hours or on a weekend, it will not execute until the market opens.
Once your order is filled, the shares appear in your account and you own them. You can sell them anytime the market is open, or hold them indefinitely. The brokerage keeps a record of what you paid and when you bought it, which you will need for taxes when you eventually sell. You will also receive a confirmation email with the order details, including the exact price you paid per share and the total cost.
Moving your account or closing it
If you open an account at one brokerage and later want to move to another, you can transfer your shares without selling them. This is called an ACAT transfer (Automated Customer Account Transfer). The new brokerage handles most of the paperwork, though some brokerages charge a transfer fee ($50 to $100 is common). The transfer usually takes five to ten business days.
If you want to close an account, you can withdraw all your money and the account closes. If you have stocks in the account, you must either sell them first or transfer them to another brokerage. There is no penalty for closing an account, but check whether you have any unsettled trades or pending transfers that might delay the process. Unsettled trades typically take two business days to clear before you can withdraw the proceeds.
Frequently Asked Questions
Do I need a lot of money to start buying stocks?
No. Most brokerages have no minimum deposit. You can open an account and buy a single share of a stock that costs $100 or $200. Some brokerages also offer fractional shares, which means you can invest $50 and own a piece of a $500 stock. Start with whatever amount you can afford to lose without hardship.
Can I buy stocks on my phone?
Yes. Every major brokerage has a mobile app for iPhone and Android. You can open an account, deposit money, and place orders entirely through the app. Some apps (like Robinhood) are designed primarily for mobile, while others (like Fidelity) offer the same features on mobile and desktop.
What if I want to buy stocks but do not want to pay taxes on the gains?
Open an IRA instead of a taxable account. With a traditional IRA, you do not pay tax on gains until you withdraw in retirement. With a Roth IRA, you pay tax on contributions now but not on gains later. Both have annual contribution limits (currently $7,000 for people under 50), and you cannot withdraw without penalty before age 59½.
Is it safe to keep my money with an online brokerage?
Brokerages are regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). Your cash and stocks are protected up to $500,000 per account through SIPC (Securities Investor Protection Corporation) insurance. This means if the brokerage fails, you get your money back. This is different from bank deposits, which are insured by the FDIC.
Can I buy stocks if I do not have a Social Security number?
Most brokerages require a Social Security number or an Individual Taxpayer Identification Number (ITIN) to open an account. This is a federal requirement for tax reporting. If you do not have either, you may not be able to open a standard account, though some brokerages have options for non-citizens — contact them directly to ask.