Q: What is the actual procedure to buy a stock?
Most people buy their stocks through an online broker, such as TD Ameritrade, E*Trade, or Schwab, just to name a few. These all charge trading commissions under $10 and offer valuable educational resources for new and experienced investors. It’s a good idea to shop around and compare the fees and features of a few brokers before picking one (The Motley Fool’s broker center can help you with that).
Once you’ve decided, opening your account is pretty straightforward. You’ll need to sign a few forms and answer some questions, which can generally be done entirely online, and you can fund the account via an electronic funds transfer (ETF) from a checking or savings account, wire transfer, by mailing in a check, or through a few other less-common methods.
After your account has been opened and funded, most brokers have a quick order-entry feature on your account’s home screen. You’ll be able to choose whether to enter a “limit” order, which means that you name the maximum price you’re willing to pay for the stock, or a “market” order, which means that you want to buy shares now at the current market price.
Once you’ve decided on your order method, simply type in the ticker symbol for the stock you want to buy, enter the number of shares you want, and hit “buy.” Before you know it, you’ll be the proud owner of your first stock.
Another option that is starting to gain traction is the use if microinvestment apps like Acorns, Stash, Betterment and Robinhood. These apps allow would-be Warren Buffetts to bypass brokerage account minimums and invest in an ETF. Each has its pros and cons, but does offer a different, secure route to investing in individual stocks.
