Where to Buy Stocks: Your Options and How They Work

You buy stocks through a brokerage — a company licensed to trade securities on your behalf

You cannot walk into a stock exchange and buy shares yourself. Instead, you open an account with a brokerage, which is a licensed firm that executes trades for you. The brokerage connects you to the market, handles the paperwork, and holds your shares in an account registered to your name.

The brokerage you choose affects what you pay in fees, what tools you get to research stocks, and how easy the account is to use. Most brokerages now charge zero commission per trade — meaning you pay nothing to buy or sell — but they may charge other fees for certain services or account types.

Key Takeaways

• All stock purchases go through a brokerage, which is a licensed firm that executes trades and holds your shares in your account.
• Most major brokerages charge no commission per trade, but some charge fees for margin accounts, inactive accounts, or certain research tools.
• Online brokerages like Fidelity, Charles Schwab, and E*TRADE are designed for self-directed investors and offer low minimums and research tools.
• Full-service brokerages assign you a financial advisor and charge higher fees, typically for investors with larger accounts or who want personalized guidance.
• Robo-advisors automate stock and fund selection based on your goals and risk tolerance, and charge lower fees than traditional advisors.

Online brokerages for self-directed investors

An online brokerage is a platform where you research stocks, place your own trades, and manage your account without talking to an advisor. You log in, find the stock you want, enter the number of shares, and execute the trade yourself. These platforms are built for people who want to make their own investment decisions.

Major online brokerages include Fidelity, Charles Schwab, E*TRADE, TD Ameritrade, Webull, and Interactive Brokers. Most require no minimum deposit to open an account, charge no commission per trade, and offer research tools, stock screeners, and educational content built into the platform. Some offer fractional shares — meaning you can buy a portion of a stock if you do not have enough cash for a full share.

The trade-off is that you are responsible for your own research and decisions. If you buy a stock that loses money, the brokerage does not advise you to sell or warn you before you buy. You get the tools; you make the calls.

Full-service brokerages with financial advisors

A full-service brokerage assigns you a financial advisor who recommends stocks and funds based on your goals and risk tolerance. You discuss your situation with the advisor, they suggest a strategy, and they execute trades on your behalf. The advisor may also manage your entire portfolio — rebalancing it, monitoring performance, and adjusting it as your life changes.

Full-service brokerages include Merrill Edge (Bank of America), Morgan Stanley, Goldman Sachs, and UBS. These firms typically require a minimum account balance — often $25,000 to $100,000 or more — and charge fees as a percentage of your assets under management, usually 0.5% to 1.5% per year. Some also charge commissions on individual trades.

The advantage is personalized guidance and someone who knows your situation. The disadvantage is higher cost and less control over day-to-day decisions. Full-service brokerages make sense if you have a large amount to invest, want professional advice, or prefer not to research stocks yourself.

Robo-advisors for automated portfolio management

A robo-advisor is a platform that builds and manages a stock portfolio for you based on a questionnaire about your goals, time horizon, and risk tolerance. You answer questions about how long you plan to invest and how much volatility you can tolerate, and the robo-advisor automatically selects a mix of stocks and funds, rebalances it regularly, and adjusts it over time.

Popular robo-advisors include Betterment, Wealthfront, Vanguard Personal Advisor Services, and Schwab Intelligent Portfolios. Most charge between 0.25% and 0.50% per year in fees, though some offer free versions with limited features. Unlike full-service advisors, robo-advisors do not provide personalized financial planning or talk through your life decisions — they focus purely on portfolio construction and rebalancing.

Robo-advisors work well if you want professional-quality portfolio management but do not want to pick individual stocks or pay for a human advisor. They are also a good entry point if you are new to investing and want a structured approach.

How to choose a brokerage

Start by deciding how much involvement you want. If you enjoy researching stocks and making your own picks, an online brokerage gives you the most control and lowest cost. If you want someone else to decide what to buy, a robo-advisor or full-service advisor handles that for you — at a higher cost.

Next, compare fees. Most online brokerages charge zero commission per trade, but check whether they charge monthly account fees, inactivity fees, or fees for certain features like margin accounts or options trading. Robo-advisors typically charge 0.25% to 0.50% per year. Full-service advisors charge 0.5% to 1.5% or more.

Then look at the tools and research available. Online brokerages vary in the quality of their stock screeners, charting tools, and educational content. Some offer paper trading — a practice account with fake money — so you can learn without risking real cash. Read reviews and try a demo account if the brokerage offers one.

Finally, check the minimum deposit. Most online brokerages have no minimum, but some robo-advisors and full-service firms require $500 to $100,000 to open an account. If you are starting small, an online brokerage is usually your only option.

What happens after you buy: custody and insurance

When you buy a stock through a brokerage, the brokerage holds it in an account registered to you. This is called custody. The brokerage is legally required to keep your shares separate from its own assets, so if the brokerage fails, your shares are protected.

Most brokerages are members of the Securities Investor Protection Corporation (SIPC), a nonprofit that insures customer accounts up to $500,000 per account holder per brokerage. This means if your brokerage goes out of business, SIPC covers your stocks and cash up to that limit. Some brokerages carry additional insurance beyond SIPC coverage.

You should also understand the difference between a cash account and a margin account. In a cash account, you can only spend money you have deposited. In a margin account, you can borrow money from the brokerage to buy stocks — but you pay interest on the loan and risk losing more than you invested if the stock price falls. Most beginners should use a cash account.

Opening an account: what you need

To open a brokerage account, you will need a Social Security number or tax ID, a government-issued ID, proof of address (usually a recent utility bill or bank statement), and your employment status. The brokerage will ask basic questions about your investment experience and financial situation to comply with regulatory requirements.

The entire process usually takes 5 to 10 minutes online. Once your account is approved — typically within one business day — you can deposit money and start buying stocks. Most brokerages offer multiple ways to deposit: bank transfer, wire transfer, check deposit by mail, or automatic recurring transfers.

Before you deposit, make sure you understand the brokerage's fee structure and any account minimums. Read the account agreement and fee schedule, which are available on the brokerage's website. If something is unclear, contact customer service before you fund the account.

Frequently Asked Questions

Can I buy stocks directly from a company without a brokerage?

Some companies offer dividend reinvestment plans (DRIPs) or direct stock purchase plans that let you buy shares without a brokerage, but these are rare and usually require you to already own at least one share. For most investors, a brokerage is the only practical way to buy stocks. The process is fast, cheap, and gives you access to thousands of stocks in one place.

Do I need a lot of money to open a brokerage account?

No. Most online brokerages have no minimum deposit — you can open an account with $1 and start buying fractional shares. Some robo-advisors require $500 to $1,000 to start. Full-service brokerages typically require $25,000 or more. If you are just starting out, an online brokerage is the most accessible option.

What is the difference between a brokerage and a bank?

A bank holds your money and offers savings accounts and loans. A brokerage buys and sells securities like stocks and funds on your behalf. Some large financial companies — like Bank of America (which owns Merrill Edge) and Charles Schwab — operate both a bank and a brokerage, but they are separate divisions with different purposes and regulations.

Will I owe taxes when I buy stocks?

No. You only owe taxes when you sell a stock at a profit. The profit is called a capital gain, and the tax you owe depends on how long you held the stock and your income level. Your brokerage will send you a tax form at the end of the year summarizing your gains and losses.

Can I move my stocks to a different brokerage later?

Yes. You can transfer your stocks from one brokerage to another through a process called an ACAT transfer (Automated Customer Account Transfer). The receiving brokerage handles most of the paperwork, and the transfer usually takes 5 to 10 business days. There may be a small fee from your old brokerage, typically $25 to $75.