You can buy stocks through a brokerage account, which is an account you open with a company licensed to trade securities
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 place orders to buy or sell stocks. The brokerage charges you a fee for this service — sometimes per trade, sometimes a flat monthly fee, sometimes nothing at all. Different brokerages offer different tools, research resources, and account types, so the right choice depends on how much you plan to trade, how much money you're starting with, and what kind of support you want.
You cannot buy stocks directly from a company's headquarters or from the stock exchange itself. You must go through a licensed intermediary. This is a legal requirement, not a choice. The brokerage is responsible for making sure you're who you say you are, that your money is real, and that your trades follow the rules.
Key Takeaways
- You need a brokerage account to buy stocks; you cannot purchase them directly from companies or exchanges.
- Most brokerages now charge zero commission per trade, but they may earn money from other sources like lending your shares or selling order information.
- Online brokerages are the most common route for individual investors and typically have lower minimum deposits than traditional investment firms.
- You will need to provide identification, proof of address, and banking information to open an account.
- Some brokerages offer fractional shares, which let you buy a piece of a stock instead of a whole share, lowering the cost to start.
Types of brokerages and what they offer
Online brokerages are the most common choice for people starting out. Companies like Fidelity, Charles Schwab, E*TRADE, TD Ameritrade, and Robinhood operate entirely online. You download an app or log into a website, fund your account, and place trades yourself. Most charge zero commission per trade. They differ in their research tools, educational resources, customer service hours, and whether they offer fractional shares.
Full-service brokerages assign you a financial advisor who helps you pick stocks and manage your portfolio. They typically charge a percentage of the money you have with them — often 1% per year — or a flat fee. This route costs more but includes personalized guidance. Examples include Merrill Edge (Bank of America), Morgan Stanley, and UBS. These firms usually require larger minimum deposits, often $25,000 or more.
Robo-advisors are automated services that build and manage a portfolio for you based on your age, risk tolerance, and goals. You answer a questionnaire, deposit money, and the service invests it in a mix of stocks and bonds automatically. Betterment, Wealthfront, and Vanguard Personal Advisor Services fall into this category. Fees are typically lower than full-service advisors but higher than self-directed online brokerages.
How to open a brokerage account
The process is the same across most online brokerages and takes 10 to 20 minutes. You will need your Social Security number, a government-issued ID, proof of your current address (a recent utility bill or bank statement works), and a bank account to link for deposits. Some brokerages let you fund your account immediately; others require a few business days for the bank transfer to clear.
When you open the account, you will choose an account type. A taxable brokerage account has no contribution limits and no restrictions on when you can withdraw money, but you pay taxes on dividends and capital gains each year. A retirement account like an IRA or 401(k) has tax advantages but restricts withdrawals before age 59½ and has annual contribution limits. Most people starting out open a taxable account first because it is simpler and more flexible.
After your account is open and funded, you can place your first trade. You search for a stock by its ticker symbol (a one- to four-letter code like AAPL for Apple), decide how many shares you want, and submit the order. The trade usually executes within seconds during market hours.
Minimum deposits and account minimums
Most online brokerages have no minimum deposit requirement. You can open an account with $1 and start buying stocks immediately. However, some brokerages that cater to wealthier investors do impose minimums — often $2,500 to $10,000 to open, and sometimes higher to access premium features like advisor access.
Individual stocks vary in price. A single share might cost $50, $200, or $1,000 depending on the company. If you have only $100 to invest, you might not be able to afford a whole share of an expensive stock. This is where fractional shares come in. Many brokerages now let you buy a fraction of a share — for example, 0.5 shares of a $200 stock for $100. This feature has made stock investing more accessible to people with smaller amounts of money to start with.
Fees and how brokerages make money
Commission per trade — the fee you pay each time you buy or sell — is now zero at most major online brokerages. This was not true 10 years ago; commissions used to be $5 to $10 per trade. The shift to zero-commission trading happened gradually between 2019 and 2020 as brokerages competed for customers.
If there is no commission, how do brokerages make money? Several ways. They earn interest on cash sitting in your account. They lend your shares to other investors who want to short-sell (bet that a stock will fall), and they keep part of the lending fee. They sell information about your trades to market makers and other traders. Some charge monthly fees for premium features like advanced research tools or advisor access. A few still charge for certain services like wire transfers or paper statements.
Read the fee schedule on the brokerage's website before you open an account. Look specifically for account maintenance fees, inactivity fees, and charges for services you think you might use.
Self-directed trading versus delegated management
When you open an online brokerage account, you are responsible for deciding what to buy and when to sell. You do the research, you make the calls, and you live with the results. This is self-directed trading. It requires time and willingness to learn, but it costs less in fees and you keep all the gains.
If you do not want to pick individual stocks, you can buy index funds or exchange-traded funds (ETFs) instead. These are bundles of stocks that track a market index like the S&P 500. They are less work than picking individual stocks and offer built-in diversification. Most online brokerages let you buy them with zero commission, just like individual stocks.
If you want someone else to manage your money entirely, a robo-advisor or full-service broker is the route. You give them money, they invest it according to a strategy that matches your goals, and you pay them a fee. You do not have to think about individual trades.
Moving money in and out of your account
Most brokerages let you link a bank account and transfer money electronically. Deposits usually clear within one to three business days. Withdrawals work the same way — you request the money, and it goes back to your bank in a few business days. Some brokerages also accept checks or wire transfers, though these methods are less common now.
When you sell a stock, the cash from that sale sits in your account and is available to buy something else immediately. If you want to withdraw it to your bank account, you initiate a transfer. There is no penalty for withdrawing money from a taxable brokerage account, though there are restrictions on retirement accounts.
Frequently Asked Questions
Do I need a lot of money to start buying stocks?
No. Most online brokerages have no minimum deposit, and fractional shares let you buy a piece of a stock for any amount. You could start with $50 or $100. The trade-off is that smaller amounts mean smaller gains, and you may pay a higher percentage of your money in fees if the brokerage charges account maintenance fees.
What is the difference between a brokerage account and a retirement account?
A brokerage account is taxable and has no limits on contributions or withdrawals. A retirement account like an IRA has annual contribution limits and penalties if you withdraw before age 59½, but you do not pay taxes on gains until you withdraw the money. Most people use both — a retirement account for long-term savings and a brokerage account for other goals.
Can I buy stocks on my phone?
Yes. Most brokerages have mobile apps that let you check prices, place trades, and manage your account from your phone. The app works the same way as the website version. You can buy and sell stocks anytime the market is open, which is Monday through Friday, 9:30 a.m. to 4 p.m. Eastern Time.
What happens if the brokerage goes out of business?
Your money and stocks are protected by the Securities Investor Protection Corporation (SIPC), a government-backed insurance program. SIPC covers up to $500,000 per account if a brokerage fails. Most major brokerages also carry additional insurance beyond SIPC. Your stocks are held in your name, not the brokerage's name, so they belong to you regardless of what happens to the company.