To own and invest in stocks, you will need an account with a stock broker. If you like to do your own stock research, the low-cost way to buy stock is through an online discount broker. Online brokerage accounts provide easy access to your account values and the ability to buy and sell stocks through the broker's website trading system.
Select an online stock broker. It is important to compare stock commissions, other fees and the services the broker provides through their website. Changing brokers can cost $100 or more, so this is an important step. The Smart Money broker 2009 Broker survey is linked below. The top three rated brokers in the survey were E-Trade, Fidelity and Charles Schwab.
Apply online for an account with the selected stock broker. The online application process will take about 10 minutes and you will receive instant approval and an account number. Stock brokers are required to collect employment information to comply with Securities and Exchange Commission rules.
Fund your brokerage account. Money can be sent to a stock broker account by wire transfer, electronic ACH transfer or by sending a check. Wire transfer is the fastest but has fees on both ends. It takes three to four days to set up an ACH transfer. Once set up, ACH is an easy way to move money in and out of your stock account.
Familiarize yourself with the broker's stock order screen and place trades for the stocks you want to own. Stock purchases are done by designating the number of shares. A market order will be filled at the current price. If you want to buy or sell at a specific price, use a limit order.
Tips & Warnings
- When researching different brokers, find the page that lists all of the fees the broker may charge. These fees are as important as the stock commission rate.
- If you want some assistance with setting up an account, use an online broker that also has a local office. Once the account is established, you can buy stocks online for the low commission rates.
- Opening a stock brokerage account is easy. Making money buying and selling stocks takes research, knowledge and experience. It is possible to lose a significant amount of your invested money in the stock market. For example, the S&P 500 lost over 50 percent of its value between July 2008 and March 2009.
- Photo Credit stocks and shares image by Andrew Brown from Fotolia.com
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