You can invest in a stock by opening a brokerage account online, depositing money, and placing a buy order. The entire process takes less than an hour at most major brokerages, and you can start with as little as $1 or $5 thanks to fractional shares. Here’s exactly how to do it, step by step.
Open a Brokerage Account
A brokerage account is the container that holds your investments, similar to how a bank account holds your cash. You’ll open one through an online brokerage, and most have no minimum deposit requirement. Fidelity, Charles Schwab, Interactive Brokers, and several others all let you start with $0 in the account.
To sign up, you’ll need a few pieces of information: your Social Security number (required for tax reporting to the IRS), a government-issued ID like a driver’s license or passport for identity verification, your employment status, and basic details about your financial situation and investment goals. Expect the application to take about 10 to 15 minutes. Most accounts are approved the same day, sometimes within minutes.
Once your account is open, you’ll link a bank account and transfer money in. Electronic transfers from a checking or savings account are the most common method and typically take one to three business days to settle, though some brokerages make a portion of your deposit available for trading immediately.
Choose the Right Account Type
Before you fund the account, decide whether you want a standard taxable brokerage account or a tax-advantaged retirement account like an IRA.
A standard brokerage account has no contribution limits and no restrictions on when you can withdraw money. The tradeoff is that you’ll owe taxes on dividends and on any profits when you sell a stock for more than you paid.
A Roth IRA, by contrast, lets your investments grow tax-free, and qualified withdrawals in retirement are also tax-free. The catch is that annual contributions are capped (the IRS sets a limit each year), and there are income limits that can reduce or eliminate your ability to contribute. A traditional IRA gives you a tax deduction on contributions now but taxes withdrawals later in retirement.
If you’re investing for retirement and haven’t maxed out your IRA, that’s often the more tax-efficient place to start. If you want flexibility to pull your money out anytime for any reason, a standard brokerage account is the better fit. You can always open both.
You Don’t Need Thousands of Dollars
One of the biggest barriers used to be price. A single share of some well-known companies costs hundreds of dollars. Fractional shares changed that. Most major brokerages now let you buy a slice of a stock rather than a whole share. Charles Schwab lets you purchase fractional shares of S&P 500 stocks for as little as $5. Fidelity, Interactive Brokers, SoFi, and Public all offer fractional shares with no account minimums.
This means if a stock trades at $400 per share and you invest $20, you’d own 0.05 shares. You still benefit proportionally from any price gains or dividends, just at a smaller scale. So cost alone shouldn’t stop you from getting started.
Trading Commissions Are Mostly Zero
Buying and selling stocks is free at nearly every major online brokerage. Fidelity, Schwab, E-Trade, Merrill Edge, Robinhood, Webull, and SoFi all charge $0 per stock or ETF trade. This is a dramatic change from a decade ago when $7 to $10 per trade was standard.
There are still a few fees worth knowing about. If you ever decide to transfer your entire account from one brokerage to another, some firms charge a transfer fee (typically $50 to $75). Options contracts, which are a more advanced type of trade, still carry small per-contract fees at most brokerages, usually around 50 to 65 cents. But for straightforward stock investing, your costs are effectively zero.
How to Place Your First Trade
With money in your account, you’re ready to buy. Search for the stock by its ticker symbol, which is the short abbreviation used on the stock exchange (for example, AAPL for Apple). Then you’ll choose the number of shares or the dollar amount you want to invest, and select an order type.
The two order types that matter for beginners are market orders and limit orders.
A market order buys the stock immediately at whatever the current price is. It guarantees your order goes through, but the exact price you pay might differ slightly from the last price you saw on screen. This is especially true for stocks that move quickly or trade in lower volume. For large, heavily traded stocks, the difference is usually pennies.
A limit order lets you set the maximum price you’re willing to pay. If the stock is trading at $150 and you place a limit order at $148, your order will only go through if the price drops to $148 or lower. This gives you more control, but the trade might not execute at all if the stock never reaches your price. Limit orders are useful when you want to avoid overpaying during volatile trading moments.
For most beginners buying shares of large, well-known companies during normal market hours, a market order works fine. If you’re buying a smaller or more volatile stock, a limit order gives you a safety net on price.
What Happens After You Buy
Once your order executes, you own the stock. You’ll see it in your account’s portfolio section along with the number of shares, the price you paid, and the current market value. Stock trades settle in one business day, meaning the transaction officially completes one day after you placed the order. You don’t need to do anything during this process.
If the company pays dividends (periodic cash payments to shareholders), those will show up in your account automatically. You can usually choose to receive dividends as cash or have them reinvested into more shares of the same stock.
Your brokerage will also generate tax documents for you at the end of each year. In a standard taxable account, you’ll receive a form showing any dividends you earned and any capital gains or losses from stocks you sold. In a Roth IRA, you generally don’t owe taxes on activity inside the account, so the tax reporting is simpler.
Deciding What Stock to Buy
Picking a stock is the part that intimidates most new investors, and for good reason. Individual stocks can be volatile. A single company can drop 20% or more on a bad earnings report.
If you’re just getting started, consider exchange-traded funds (ETFs) alongside or instead of individual stocks. An ETF is a single investment that holds dozens or hundreds of stocks bundled together. An S&P 500 ETF, for example, gives you a small piece of 500 large U.S. companies in one purchase. This spreads your risk so that one bad stock doesn’t sink your whole portfolio.
If you do want to buy individual stocks, focus on companies you understand. Look at basic metrics like revenue growth, profitability, and how much debt the company carries. Your brokerage’s research tools will show you these figures alongside analyst ratings and recent news. Start with a small amount you’re comfortable potentially losing while you learn how the market works, and add to your positions over time as you gain confidence.