How to Buy Stocks Online
So you want to know how to buy stocks online but have questions. How to start? Are the fees high? Is it safe? This detailed guide will help.
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Most parents teach their kids skills like tying their shoes and brushing their teeth. But few kids learn another essential skill — financial literacy.
Since you've found this article, you've probably realized you needed to learn more about investing.
Maybe this happened only a few minutes ago. Or maybe it's been a few years.
If it was the latter, there's a good chance you got discouraged. Until recently, buying stocks for the first time was a pretty daunting task.
But times have changed.
Buying Stocks Online for the First Time
To get started investing, you used to have to:
- Visit a financial office
- Fill out lengthy paperwork
- Talk to an imposing professional in a suit
And that's enough for plenty of people to say "no thanks."
Depending on how much money you had to invest, they may have even rejected your business.
What's changed? Recently there's been a boom of companies focused on making investing much easier and cheaper.
Once buying stocks was a thing for rich men who wore "power ties" and read financial magazines. Now it's an option for everyone.
And a little secret—it's probably not as hard as you think.
You just need to:
- Choose where to buy your stocks online
- Choose which stocks to buy
If you know what you're doing, it can take just a few minutes. And you can get started for free.
In this guide, you'll learn everything you need to know to buy stocks online for the first time. You'll also learn a vital tip for deciding which stocks to buy, which could save you a lot of money.
Let's dive in.
How to buy stocks online
Buying stocks online is a quick process, once you understand where to buy and which stocks to invest in.
You don't need any special qualifications or certifications. Or even much special knowledge—although we'll cover how to research stocks in a bit.
While there was a time when setting up a trading account was a time-consuming hassle, these days, the best trading platforms have streamlined the process.
Most people just need to:
- Provide information to verify your identity. Regulations require financial companies to comply with KYC (know your customer) and AML (anti-money laundering) regulations.
- Link your bank account
- Buy your first stock
All in all, the sign-up process usually just takes a few minutes.
Of course, first, you'll need to pick a trading platform.
Where can I buy stocks online?
There are plenty of trading platforms aimed at beginners. Most are free and some have zero account minimums.
But there are so many great platforms that finding the best place to buy stocks online can be overwhelming.
That's why we're here to walk you through them. You'll learn where you can buy stocks for free, or at least as close to free as possible.
Commission-free platforms aren't 100% free. "Free" platforms make money from the bid/ask spread, which amounts to the difference between the bid (buy) and ask (sell) price. This is often undisclosed. But it's usually a very small percentage. In the past, it was common to pay $5 to $10 per trade.
While this list is far from exhaustive, here are some of the most popular trading platforms and brokerage accounts on the net.
E*Trade
E*Trade is a beginner-friendly stock exchange that lets you trade a range of assets, including stocks, bonds, mutual funds, and ETFs. Their interface is easy to use and they offer free stock trading.
While there is no minimum deposit to open a brokerage account on E*Trade, there is a minimum $500 initial investment for Core Portfolios, E*Trade's robo-advisor service.[1]
Robinhood
Robinhood is a well-known stock and cryptocurrency trading app that offers commission-free trading with no minimums.
While it is one of the easiest ways to buy stock, it is more limited than some of its competitors in terms of investment options and features.
M1 Finance
M1 Finance can help investors who aren't sure what to invest in. They offer a combination of guidance and freedom that may appeal to those just dipping their toes into stock investing.
However, if you're interested in frequent trading, you should keep in mind that they limit the number of trades you can make per day.
M1 Investment Account - Up to $500 Bonus
Open a new M1 investment account. Deposit $10,000 or more into the account within 14 calendar days of account opening. Promotional credit will depend on the deposited value made into the account.
| Deposited Value | Promotional Credit |
|---|---|
| $10,000 - $29,999.99 | $75 |
| $30,000 - $49,999.99 | $150 |
| $50,000 - $99,999.99 | $250 |
| $100,000+ | $500 |
This offer is only for customers who have never registered for an M1 user account.
eToro
eToro is an excellent option if you're interested in trading cryptocurrency, in addition to stocks. As a social trading platform, it can also be a good place to learn more about investing.
Where eToro may be lacking is in its customer service, which can be slow to respond to requests.
Deposit $100 and Get $10 from eToro USA LLC
- Sign up for an eToro account
- Deposit $100
Fidelity
Fidelity is a solid trading platform that works well both for beginners and advanced traders. It's commission-free and offers a strong selection of research tools if you know how to use them.
While Fidelity is a strong platform, they have trading minimums that may be unattainable for some investors.
Ally Invest
Ally is another platform that offers free stock trading. They have no minimum deposit and a solid, user-friendly interface.
One reason you might want to choose another platform is that they have no physical locations.
TD Ameritrade
TD Ameritrade is a powerful trading platform whose wide range of features may be lost on new traders. They offer commission-free stock trading with no minimum deposit and a range of commission-free ETFs, as long as you hold them for longer than 30 days.
If you're worried about getting overwhelmed by too many tools, consider another platform instead.
TD Ameritrade: Commission-Free Trading - Online Stock, ETF and Option Trades
Applies to U.S. exchange-listed stocks, ETFs, and options. A $0.65 per contract fee applies for options trades, with no exercise or assignment fees.
Stash
With Stash, you can buy stocks online for free and start investing with little money. This micro-investing platform offers helpful guidance for beginners and lets users invest based on preset themes.
You may want to consider another platform if you only plan to invest very small amounts because the monthly fees may eat up much of your gains.
Which should you choose?
As with all investment decisions, do your own research. That's why we've linked in-depth reviews on each trading platform. Check out the ones that caught your eye.
Fortunately for almost every investor, there's an online brokerage that will be right for you. Do you have very little money to invest right now? No worries. Thinking of starting to day trade? You can do that too.
Since trading accounts are easy to sign up for, you can always switch later as you learn more.
Now it's time for the more fun part. Choosing which companies to invest in.
Choosing Stocks to Buy
Once you've decided on the best place to buy stocks, signed up, and funded your account, you're ready to buy stocks. But do you have a plan as to what you want to invest in?
Choosing the right stocks can be a challenge for both beginners and seasoned traders, and ultimately, we can't tell you what the right choice is.
What we can tell you is that choosing stocks is a decision you should make carefully. The stock market is volatile. Prices can change suddenly and dramatically, and if you aren't careful, you can lose money.
When choosing investments, consider companies you're actually interested in being an owner of rather than ones that you simply hope will make you rich.
While this isn't a guarantee of success, it makes it more likely that you'll have a better understanding of the company's business, which is ultimately your best guide to making smart decisions.
If you're caught up wondering, "Where can I buy a stock?" and can't decide on a brokerage, consider trying a demo or paper trading account instead. These accounts let you trade with virtual money so you can get a feel of what the stock market is really like—without the risk of losing your money. Once you're comfortable with the stock market itself, you can start thinking about how to buy stocks for free.
Bottom Line
For those wondering where to buy stock online, the truth is, that you have a lot of options. When you're just starting, buying stock for free through one of the many commission-free exchanges listed above is probably your best choice.
Once you've got a little experience under your belt, you may find that the best way to buy stock is not the one you chose initially. Fortunately, it's easy enough to change.
Before you start investing, always remember to do your research, try to invest in things you understand, and never invest more money than you can afford to lose.
References
- ^ E*TRADE. Pricing and Rates, Retrieved 6/22/2022
Jeremy Harshman is a creative assistant at CreditDonkey, a personal finance comparison and reviews website. Write to Jeremy Harshman at jeremy.harshman@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.
Note: This website is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content. You do not have to use our links, but you help support CreditDonkey if you do.
eToro is a multi-asset investment platform. The value of your investments may go up or down. Virtual currencies are highly volatile. Your capital is at risk. Copy Trading does not amount to investment advice. The value of your investments may go up or down. Your capital is at risk. Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong. Take 2 mins to learn more. Cryptocurrency is offered by eToro USA LLC (“the MSB”) (NMLS: 1769299) and is not FDIC or SIPC insured. Investing involves risk, and content is provided for educational purposes only, does not imply a recommendation, and is not a guarantee of future performance. eToro USA LLC does not offer CFDs and neither does it represent or assume any responsibility for the accuracy or completeness of the content of this publication, prepared by the Affiliate, as a partner, using information available and public and not specific to the eToro entity.
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