How to Buy Stocks: Tips for Getting Started

For buy stocks, you need the help of a licensed stockbroker to purchase securities on your behalf. However, before making a decision on a stockbroker, you need to determine which type of stockbroker is best for you. you.

There are four basic categories of stockbrokers available today, ranging from simple and inexpensive order takers to more expensive brokers who provide full service and in-depth financial analysis, advice and recommendations: online/discount, assisted discount brokers, full service brokers or fund managers.

Key points to remember

  • It has never been easier for individuals to start investing and trading stocks.
  • Several online brokers now allow you to open an account with low opening balances and low fees, and since 2019 many brokers also offer $0 commissions on stock trades.
  • Before you start trading on your own, you can also try out some strategies by using a simulated or demo account first.

I want to start buying stocks: where to start?

Online/discount brokers

Online/discount brokers are essentially just order takers and offer the cheapest way to start investing, as there are usually no offices to visit and no financial planners or certified advisors for you to help. The only interaction with an online broker is over the phone or via the Internet. The cost is usually based on a transaction or per action, allowing you to open an account with relatively little money. An account with an online broker allows you to buy and sell stocks/options instantly with just a few clicks.

Since these types of brokers provide absolutely no investment advice, stock index or any type of investment recommendation, you are on your own. You will get technical support for the online trading system. Additionally, online brokers typically provide links to investing-related websites, research, and resources, but these may be third-party vendors. If you feel you are knowledgeable enough to take on the responsibility of directing your own investments, or want to learn how to invest without making a large financial commitment, this is the way to go.

Discount brokers with assistance

Discount brokers with support are basically the same as online brokers, except that they are likely to charge a very small account fee to pay for the additional support. This assistance, however, usually only consists of providing a little more information and resources to help you with your investments.

Discount brokers can be the same companies as your basic online/discount brokers that offer scalable accounts or services. However, they refrain from giving you investment advice or recommendations. For example, they may offer more internal research and reports or publish investment bulletins with investment advice.

Full Service Brokers

Full service brokers are traditional stockbrokers who take the time to sit down with you and get to know you personally and financially. They look at factors such as marital status, lifestyle, personality, risk tolerance, age (time horizon), income, assets, debts and more.

Full-service brokers then work with you to develop a financial plan best suited to your investment goals and objectives. They can also help with estate planning, tax advice, retirement planning, budgeting and all other types of financial advice, hence the term “full service”. They can help you manage all your financial needs now and for the rest of your life, if needed.

These types of brokers are for those who want everything in one package. In terms of fees, they are more expensive than discount brokers, but the value of having a professional financial advisor on your side can be well worth the extra costs – accounts can usually be opened with as little as $1,000.

Fund managers

Fund managers are a bit like financial advisors but can have full control over a client’s account (hence the term “manager”). These highly trained investment professionals typically manage very large silver portfolios and therefore charge management fees (which can be quite significant) based on assets under management and not per trade.

Fund managers are basically for those with substantial incomes who prefer to pay someone to fully manage their investments while they do the jobs that make money. Minimum account holdings can range from $100,000 to $250,000 or more and can charge up to 1% per year of assets under management.


Roboadvisors are digital asset managers that cater to those who just want to set it and forget it. These algorithmic platforms are inexpensive, require low minimum balances, and will automatically maintain an optimal portfolio for you, usually based on passive index investing strategies. For example, typical fees for roboadvisors are currently around 0.25% per year of assets under management, and you can start with literally $1 or $5 with multiple platforms.

Roboadvisors vary in their offerings. Some are fully automated, while others also provide access to human assistance. Regardless of the model, they all provide customer service to help you through the process. The robo-advisor has been around for a few years, but it continues to grow.

New entrants to the landscape benefit the consumer by reducing fees while providing many avenues to professional asset management. As with any life choice, you should determine the type of investment advice you need and select a robo-advisor or finance professional based on your individual goals, risk preferences and style. of investment.

Test strategies before buying real stocks

For those who want to learn what stock trading is all about without spending hundreds or thousands of dollars, you can join for free. Investopedia Simulator Account.

The simulator is a simulated online brokerage account for users, who are given US$100,000 in play money, to practice investment strategies or simply learn how to trade stocks and options in real companies on the stock market. You should also register for our free Investing Basics Newsletter to learn more about stock trading.

Once you have figured out how stock trading works and what is most important to you in a broker, you can move on to the next step. Each broker’s pricing, features, and platforms are different, so this step can be daunting. If you have trouble choosing a broker, search for the best online brokers Where best discount brokers.

What are the experts saying?

Advisor Overview

Joe Allaria, CFP®
CarsonAllaria Wealth Management, Glen Carbon, IL

You will need to make a significant investment in learning and monitoring what is happening in the market. Before taking any action, I would recommend learning as much as you can about securities, perhaps by taking investment courses offered by an accredited program. Also, learn as much as you can about the different investment philosophies.

Then do a test: choose stocks and watch their daily fluctuations, seeing how they affect your bottom line. If you can’t handle the volatility, you need to create a new strategy or consider hiring an advisor. Working with one, even temporarily, is one way to get accelerated investment education. The key is to acquire the knowledge to make informed decisions and never blindly follow the next stock market tip you see.

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