Buying stocks online takes about 15 minutes once you have a brokerage account open. The entire process comes down to five steps: picking a broker, opening an account, funding it, choosing a stock, and placing an order. Every major online broker now charges $0 per trade for U.S. stocks and ETFs, so the barrier to entry is lower than it has ever been.
Choose an Online Broker
Your broker is the platform where you’ll buy and hold your stocks. For beginners, look for three things: no account minimum, $0 trading commissions, and the ability to buy fractional shares. Fractional shares let you buy a slice of a stock for as little as $1 or $5, so you don’t need $200 to own a share of a company trading at that price.
Several brokers meet all three criteria. Fidelity, SoFi Active Investing, Public, Interactive Brokers (IBKR Lite), and J.P. Morgan Self-Directed Investing all offer $0 commissions, $0 account minimums, and fractional share trading. Charles Schwab also offers fractional shares through its Stock Slices feature, though it limits those purchases to companies in the S&P 500. Vanguard supports fractional purchases only for its own ETFs. Any of these will work fine for getting started.
When comparing platforms, pay attention to the app and website experience. Sign up feels similar across brokers, but the day-to-day interface matters. Some platforms lean toward simplicity with clean mobile apps, while others offer more research tools and screeners. If you plan to mostly buy and hold a few stocks, a simpler app is fine. If you want to dig into company financials and analyst ratings before buying, look for a platform with built-in research.
Pick the Right Account Type
When you open an account, the broker will ask what type you want. The two most common choices for beginners are a standard taxable brokerage account and an IRA.
A taxable brokerage account has no restrictions on when you can withdraw money or how much you can contribute each year. You can buy stocks today and sell them tomorrow, then transfer the cash to your bank account. The tradeoff is taxes: you’ll owe capital gains tax on any profit when you sell, and dividends are taxed in the year you receive them.
A Roth IRA is a retirement account where your investments grow tax-free. You contribute money you’ve already paid income tax on, and qualified withdrawals in retirement come out with zero taxes owed, including on all the gains. The catch is that annual contributions are capped, and pulling out earnings before retirement age triggers taxes and penalties. If you’re investing for the long term and don’t expect to need the money for decades, a Roth IRA gives you a significant tax advantage. If you want flexibility to access your money anytime, go with a taxable account. Many investors eventually open both.
Fund Your Account
After your account is approved (most brokers verify your identity within one to two business days), you’ll link a checking or savings account and transfer money in. Bank transfers typically take one to three business days to settle, though some brokers let you trade immediately with a portion of the pending deposit.
Start with whatever amount you’re comfortable with. Because fractional shares exist, there’s no practical minimum. Even $50 is enough to buy pieces of several stocks or an ETF, which is a fund that holds a basket of stocks so you get instant diversification with a single purchase.
Decide What to Buy
This is where most beginners stall, but it doesn’t need to be complicated. You have two broad options: individual stocks and ETFs.
Individual stocks let you own a piece of a single company. If you buy shares of a retailer or a tech company, your investment rises and falls with that company’s performance. This can mean bigger gains, but also bigger losses, because you’re concentrated in one business.
ETFs spread your money across dozens or hundreds of companies in a single purchase. A total stock market ETF, for example, holds thousands of U.S. companies. An S&P 500 ETF tracks the 500 largest. For beginners, a broad ETF is often the simplest way to start because you’re not betting on any single company’s success. You can always add individual stocks later as you learn more.
Whatever you choose, look up the stock or ETF by its ticker symbol, which is the short abbreviation used on exchanges (like AAPL for Apple or VTI for Vanguard Total Stock Market ETF). Your broker’s search bar will help you find it.
Place Your First Trade
Once you’ve picked a stock or ETF and searched for its ticker, you’ll see an option to buy. The broker will ask you two things: how many shares (or how many dollars, if buying fractional shares) and what type of order.
A market order buys the stock immediately at whatever the current price is. This is the simplest option. You’re telling your broker, “Buy this right now at the best available price.” The price you pay might differ slightly from the quote you saw a moment ago, especially if the stock is moving quickly, but for large, frequently 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 but you only want to buy it at $145, you’d place a limit order at $145. The trade only goes through if the stock drops to your price. This gives you price control but no guarantee the order will fill. If the stock never hits $145, nothing happens.
For beginners buying well-known stocks or ETFs during regular market hours (9:30 a.m. to 4:00 p.m. Eastern, Monday through Friday), a market order works fine. Limit orders become more useful when you’re buying less frequently traded stocks, when markets are volatile, or when you have a specific price target in mind.
After you confirm the order, your broker executes it, and the shares appear in your account. The money is deducted from your cash balance. That’s it.
Watch for Fees Beyond Commissions
Stock trades are free at all the major brokers, but other fees can sneak up on you. The SEC notes that brokers may charge for account transfers, wire transfers, account inactivity, or failing to maintain a minimum balance. These fees aren’t always obvious on your account statements.
The most common fee beginners encounter is the ACAT transfer fee, charged when you move your entire account from one broker to another. This typically runs $50 to $75. Some brokers will reimburse this fee if you’re transferring a large enough balance to them. Wire transfer fees (for sending cash to a bank account same-day) usually run $25. Standard bank transfers are free.
Before opening an account, check the broker’s fee schedule, which is usually listed under “pricing” or “commissions and fees” on their website. If anything is unclear, ask before you deposit money.
Taxes When You Sell
You don’t owe any tax just for buying or holding stocks in a taxable account. Taxes kick in when you sell at a profit.
Your broker will send you a Form 1099-B at the beginning of the following year for any stocks you sold. This form reports the sale price, your cost basis (what you originally paid), and whether the gain or loss is short-term or long-term. You’ll use this information to fill out Schedule D on your tax return.
The distinction between short-term and long-term matters for your tax bill. If you held the stock for one year or less before selling, any profit is a short-term capital gain, taxed at your regular income tax rate. If you held it for more than one year, it’s a long-term capital gain, which is taxed at a lower rate (0%, 15%, or 20% depending on your income).
If you sell a stock at a loss, that loss can offset gains from other sales, reducing your tax bill. One rule to know: the wash sale rule. If you sell a stock at a loss and buy the same stock back within 30 days, the IRS disallows the loss for tax purposes. Your broker tracks this automatically for sales and repurchases within the same account and reports it on your 1099-B.
Stocks held in a Roth IRA avoid this complexity entirely. You won’t receive a 1099-B for trades inside the account, and qualified withdrawals in retirement are tax-free regardless of how much your investments have grown.