How to Start Buying Stocks

How to buy your first stock

To buy a stock, you open an account with a brokerage — a company licensed to buy and sell securities on your behalf. You fund that account with money, search for the stock you want (using its ticker symbol, a short code like AAPL for Apple), enter how many shares you want, and confirm the purchase. The brokerage executes the trade, holds the shares in your account, and sends you a confirmation. The whole process takes minutes once your account is open.

The account itself takes one to three business days to set up. You'll need a Social Security number, a valid ID, proof of address, and a bank account or debit card to fund it. Most brokerages let you start with any amount — some have no minimum, though a few require $500 or $1,000 to begin. Once the account is funded and verified, you can place your first trade immediately.

Key Takeaways

• You buy stocks through a brokerage account, which you can open online in minutes and fund from a bank account or debit card.
• Each stock trade charges a commission or fee, which varies by brokerage — many charge nothing per trade, but some charge $5 to $10.
• You can buy individual stocks one at a time, or use a brokerage's fractional share feature to buy a portion of an expensive stock with a small amount of money.
• Your brokerage holds your shares and sends you statements showing what you own, what it's worth, and any dividends you've received.
• Stocks bought in a regular brokerage account are taxable when you sell them at a profit or receive dividends; tax-advantaged accounts like IRAs avoid this until withdrawal.

Choosing a brokerage

A brokerage is simply the intermediary that executes your trades. The major ones — Fidelity, Charles Schwab, E*TRADE, TD Ameritrade, Robinhood, and Webull — all let you buy stocks, but they differ in fees, tools, and account minimums. Most have dropped per-trade commissions, so the main differences are now account minimums, customer service quality, and whether they offer fractional shares (letting you buy a portion of a stock for less money).

Fidelity and Charles Schwab have no account minimums and no per-trade fees. Robinhood and Webull also charge no fees and have no minimums, but they're designed for frequent traders and offer less educational content. E*TRADE and TD Ameritrade have similar structures but may require higher minimums for certain account types. If you're starting out, a brokerage with no minimum, no per-trade fees, and a straightforward interface is usually the best choice.

Check whether the brokerage offers fractional shares — this lets you invest a fixed dollar amount (say, $50) rather than buying whole shares. If a stock costs $300 per share, fractional shares let you own one-sixth of a share instead of waiting to save $300. Not all brokerages offer this, so it's worth confirming if you plan to invest small amounts.

Understanding the costs of buying stocks

Most major brokerages now charge zero commission per trade, meaning you pay nothing to buy or sell a stock. However, some smaller or specialized brokerages still charge $5 to $10 per trade. Before you open an account, check the brokerage's fee schedule — it's usually listed under "Pricing" or "Commissions" on their website.

Beyond commissions, you may encounter other costs. Some brokerages charge account maintenance fees (though most waive these if you maintain a minimum balance or set up direct deposit). If you buy stocks on margin — borrowing money from your brokerage to invest — you'll pay interest on that borrowed amount. For a beginner, paying cash and avoiding margin is the simpler path.

There are also bid-ask spreads, which are the tiny differences between what buyers will pay and what sellers are asking. When you buy a stock, you pay the asking price; when you sell, you receive the bid price. The difference is pocketed by market makers, not your brokerage, but it's a real cost you should know about. For heavily traded stocks like Apple or Microsoft, spreads are usually just a penny or two. For less-traded stocks, spreads can be wider.

Placing your first trade

Once your account is funded, buying a stock follows a standard sequence. Log into your brokerage account and look for a "Buy" or "Trade" button. Enter the stock's ticker symbol — you can search by company name, but the ticker is faster and more precise. The brokerage will show you the current price, and you'll enter the number of shares (or dollar amount, if the brokerage supports it) you want to buy.

Before you confirm, review the order details: the stock name, ticker, number of shares, and total cost. Most brokerages let you choose between a market order (buy at the current price immediately) or a limit order (buy only if the price drops to a specific level you set). For your first purchase, a market order is simpler — it executes right away at the current market price. Click confirm, and the trade is placed.

You'll receive a confirmation email with the trade details, including the exact price you paid per share, the total number of shares, and the total cost. The shares appear in your account immediately, though settlement — the official transfer of ownership — takes two business days. You can sell the shares before settlement is complete, but you can't withdraw the cash from a sale until settlement is done.

How your brokerage holds and reports your shares

Your brokerage keeps your shares in an account registered in your name. You don't receive physical stock certificates anymore — ownership is recorded electronically. Your brokerage sends you statements (usually monthly or quarterly) showing what you own, how many shares of each stock, the current value, and any dividends or interest you've earned.

If a company you own stock in pays a dividend — a cash payment to shareholders — your brokerage deposits it into your account automatically. You can either withdraw the cash or reinvest it to buy more shares. Most brokerages let you set up automatic dividend reinvestment, which buys fractional shares with each dividend payment.

Your brokerage is required to report your trades and any income (dividends, interest) to the IRS on a Form 1099. You'll receive a copy in January after the tax year ends. Keep your brokerage statements for your records — they're your proof of what you bought, when, and for how much, which you'll need when you file taxes or sell shares.

Tax considerations for stock investors

When you sell a stock for more than you paid for it, you have a capital gain, which is taxable income. The tax rate depends on how long you held the stock. If you held it for less than one year, it's taxed as ordinary income at your regular tax rate. If you held it for more than one year, it's taxed at the long-term capital gains rate, which is lower — 0%, 15%, or 20%, depending on your income level.

Dividends are also taxable. may have access to dividends (paid by most U.S. companies) are taxed at the long-term capital gains rate. Non-may have access to dividends are taxed as ordinary income. Your brokerage reports all of this on your 1099 form, and you report it on your tax return.

If you want to avoid taxes on stock gains until you withdraw the money, consider opening a tax-advantaged account like a traditional IRA or Roth IRA instead of a regular brokerage account. These accounts let you buy and sell stocks without triggering taxes each year. Taxes are deferred (traditional IRA) or avoided entirely (Roth IRA), but you can't withdraw the money penalty-free until age 59½. Most brokerages let you open an IRA alongside a regular brokerage account.

Starting with small amounts and building over time

You don't need a large sum to start investing in stocks. Many brokerages let you open an account with $1 or $10, and fractional shares mean you can invest any dollar amount you choose. Some investors start by buying one share of a stock they understand, then add more over time as they learn and save.

A common approach is to set up automatic monthly investments — your brokerage will deduct a fixed amount from your bank account each month and buy stocks with it. This is called dollar-cost averaging, and it removes the pressure of timing the market perfectly. Whether you invest $50 or $500 per month, the process is the same: fund your account, choose your stocks, and let the purchases happen automatically.

Many beginners start by buying a few stocks they know — companies whose products they use — before moving to a more diversified approach like index funds or ETFs. There's no wrong starting point as long as you're learning as you go.

Frequently Asked Questions

Can I buy stocks with a small amount of money, like $100?

Yes. Most brokerages have no account minimum, and fractional shares let you invest any amount. With $100, you could buy one full share of a cheaper stock or fractional shares of multiple expensive stocks. The key is finding a brokerage that offers fractional shares and charges no per-trade fees.

What's the difference between a market order and a limit order?

A market order buys immediately at the current price. A limit order buys only if the price drops to a level you set. Market orders are faster and more certain to execute; limit orders give you control over price but may never execute if the stock doesn't reach your target. For beginners, market orders are simpler.

Do I have to pay taxes on stocks I own but haven't sold?

No. You only pay taxes when you sell a stock at a profit (capital gains tax) or when you receive a dividend. Simply owning a stock that goes up in value is not a taxable event. Taxes are due only when you realize the gain by selling.

How long does it take to sell a stock and get the money?

The sale executes immediately during market hours, but settlement takes two business days. You can see the cash in your account after settlement, but you can't withdraw it until then. If you need the money urgently, plan ahead — don't sell on a Friday expecting to withdraw on Monday.

What happens to my stocks if the brokerage goes out of business?

Your stocks are protected by SIPC (Securities Investor Protection Corporation), which insures up to $500,000 per account if a brokerage fails. Your shares are held in your name, not the brokerage's, so they're legally yours regardless of what happens to the company. This is why it's safe to use any licensed brokerage.