How to Buy Your First Stock
Opening the right account comes before you can buy anything
You cannot buy stocks directly. You need a brokerage account — a holding place for your money and your stocks, run by a company licensed to trade on your behalf. Opening one takes 10 to 20 minutes online and requires a Social Security number, a bank account to fund it with, and a valid ID.
The brokerage holds your cash until you tell it to buy, holds the stocks once you own them, and handles the actual transaction on the stock exchange. You pay the brokerage a commission or fee for this service, though many brokerages now charge zero commission per trade for stocks and ETFs.
The most common brokerages for individual investors are Fidelity, Charles Schwab, E-Trade, Interactive Brokers, and Robinhood. Each has different features — some offer research tools, some have lower account minimums, some are simpler for beginners. You will pick one based on what matters to you: cost, ease of use, research available, or customer service.
Key Takeaways
- You open a brokerage account with a company like Fidelity or Charles Schwab, fund it with cash from your bank, and then use that account to buy stocks.
- Most brokerages charge zero commission per stock trade, but some charge monthly fees or require minimum account balances.
- You search for a stock by its ticker symbol (a one- to five-letter code), see its current price, and place an order to buy a specific number of shares.
- Your order executes during market hours (9:30 a.m. to 4 p.m. Eastern time on weekdays), and the shares appear in your account within one business day.
- You can sell your shares anytime the market is open, and the cash returns to your brokerage account within one business day.
Funding your account with cash from your bank
Once your brokerage account is open, you link it to a checking or savings account at your bank. The brokerage will ask for your bank's routing number and your account number — both appear on a check or in your bank's website.
You then transfer money from your bank to your brokerage. This usually takes one to three business days. Some brokerages offer instant transfers if you connect your account through a service like Plaid, which reads your bank login securely without storing it.
The cash sits in your brokerage account until you buy stocks. If you change your mind, you can transfer the cash back to your bank anytime, though the transfer takes the same one to three business days.
Finding and buying a specific stock
Every stock has a ticker symbol — a short code that identifies it. Apple is AAPL, Microsoft is MSFT, Tesla is TSLA. You search for the stock by its ticker in your brokerage's search bar or by the company name.
Once you find the stock, the brokerage shows you its current price (updated throughout the day), a chart of its price history, and basic information about the company. You decide how many shares you want to buy. If Apple is trading at $150 per share and you have $3,000 in your account, you could buy 20 shares.
You then place an order. A market order buys the stock at whatever price it is trading at right now — this executes almost instantly during market hours. A limit order lets you set a maximum price you are willing to pay; if the stock never drops to that price, the order never executes. Most beginners use market orders.
When your order executes and where your shares go
If you place an order during market hours (9:30 a.m. to 4 p.m. Eastern time, Monday through Friday), it executes within seconds. If you place an order outside market hours or on a weekend, it waits until the market opens the next trading day.
Once your order executes, the shares belong to you. They appear in your brokerage account within one business day, listed by ticker symbol and number of shares. The cash leaves your account immediately.
Your brokerage sends you a confirmation email with the details: the date, the number of shares, the price per share, and the total cost including any commission or fees. Keep this for your records and for taxes.
Selling your shares when you want to
You can sell your shares anytime the market is open. You go to your brokerage account, find the stock you own, and click "Sell." You choose how many shares to sell (you can sell all of them or just some), and the brokerage shows you the current price and what you will receive after any fees.
Like buying, you can place a market order (sell at the current price right now) or a limit order (sell only if the price reaches a certain level). Market orders execute within seconds during market hours.
Once your sale executes, the cash returns to your brokerage account within one business day. You can then transfer it back to your bank, use it to buy other stocks, or leave it sitting in your account.
Understanding costs: commissions, fees, and taxes
Most major brokerages charge zero commission per stock trade, meaning you pay nothing to buy or sell. However, some brokerages charge monthly account fees (often waived if you maintain a minimum balance) or charge commissions on certain types of trades.
When you sell a stock for more than you paid for it, you owe capital gains tax on the profit. The tax rate depends on how long you held the stock and your income level — the IRS taxes short-term gains (stocks held less than a year) as ordinary income, and long-term gains (held a year or more) at lower rates. Your brokerage sends you a tax form (Form 1099-B) each January listing all your sales from the previous year.
If you sell for less than you paid, you have a loss, which can offset other gains or income on your taxes.
Starting with a small amount and learning as you go
You do not need a large amount of money to start. Many brokerages have no account minimum, so you can open an account with $100 or $500 and buy fractional shares — meaning you can own part of a stock even if the full share costs more than you have to spend.
If Apple costs $150 per share and you have $50, you can buy one-third of a share. This makes it easier to diversify (own many different stocks) without needing thousands of dollars upfront.
Most beginners benefit from reading a brokerage's educational materials or watching tutorials before placing their first trade. Every brokerage offers these free, and they walk you through the exact steps in their platform.
Frequently Asked Questions
Can I buy stocks on the weekend or after the market closes?
You can place an order anytime, but it will not execute until the market opens on the next trading day. The stock market is open 9:30 a.m. to 4 p.m. Eastern time, Monday through Friday, except on federal holidays. Some brokerages offer after-hours trading, but prices are less stable and spreads (the difference between buy and sell prices) are wider.
What happens if I do not have enough cash to buy the number of shares I want?
Your brokerage will reject the order. You can either deposit more cash, buy fewer shares, or wait until you have saved more. Some brokerages offer margin accounts that let you borrow money to buy stocks, but this adds risk and complexity — beginners should avoid margin until they understand how it works.
Do I have to hold a stock forever once I buy it?
No. You can sell anytime the market is open. There is no penalty for selling quickly, though the IRS taxes short-term gains (held less than a year) at higher rates than long-term gains. You can also hold for decades if you want.
What if the company goes bankrupt after I buy its stock?
Your shares become worthless, and you lose the money you invested. This is why diversifying — owning many different stocks rather than putting all your money in one — matters. If one company fails, you still own others.
How do I know what price to pay for a stock?
You cannot predict the future price. The market price is what buyers and sellers agree on right now. Some investors research the company's finances and industry before buying; others use strategies like dollar-cost averaging (buying the same dollar amount every month regardless of price). There is no single "right" price — it depends on your research and your strategy.