How to Buy Stocks: Step-by-Step Beginner Guide
Written by
Caitlyn Moorhead
Edited by
Joe Evans, CFHC™
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Learning how to buy stocks is easier than ever, but knowing what to do (and what to avoid) is what actually builds wealth.
At its core, buying stocks means purchasing shares of ownership in a company. When you invest, you’re betting that the company will grow over time.
Today, you can buy stocks in just a few minutes using an online brokerage. But before you jump in, it’s important to understand the process so you don’t make costly mistakes.
In this guide, you’ll learn:
- Exactly how to buy stocks step by step
- What beginners should focus on first
- Common mistakes to avoid
- How to make smarter investing decisions
How to Buy Stocks: At a Glance
Step What You Do 1 Open a brokerage account 2 Fund your account 3 Research stocks 4 Choose how many shares to buy 5 Place your order 6 Monitor and manage your investment
Step-by-Step: How to Buy Stocks
1. Open a Brokerage Account
You can’t buy stocks without a brokerage account. It’s the platform that connects you to the market. When opening an account, you’ll typically need to provide some personal information, your financial details and your investment goals.
This helps brokers determine suitable investments and comply with regulations. Typically, most beginners choose a cash account to avoid borrowing risks.
2. Fund Your Account
Before placing a trade, you need to deposit money. If you want to buy $1,000 worth of stock, you need that full amount available in your account.
You can fund your account via a bank transfer, wire transfer or direct deposit from your bank account.
3. Research the Stocks You Want to Buy
Buying a stock means owning part of a company, so research matters. Ask questions like:
- How does the company make money?
- Is it growing?
- Does it have strong leadership?
Doing due diligence helps you determine whether a stock fits your goals.
Pro Tip: Start with companies you already understand.
4. Decide How Many Shares to Buy
You don’t need thousands of dollars to get started. Many brokerages offer fractional shares (allowing you to buy part of a stock) and dollar-based investing. Both options help you start small and build over time, which is often the smartest approach for beginners.
5. Choose an Order Type
When buying stocks, you’ll choose how your order is executed.
| Order Type | What It Means |
|---|---|
| Market order | Buy immediately at current price |
| Limit order | Buy at a specific price or better |
Market orders execute quickly, while limit orders give you more price control.
6. Place Your Trade
Once everything is set:
- Enter the stock ticker
- Choose your number of shares
- Select your order type
- Submit the trade
Most platforms let you do this in seconds via app or desktop.
7. Monitor Your Investment
Buying a stock isn’t the end. From there, you should track the stock’s performance, stay up-to-date on company news for shares you own and don’t be afraid to rebalance your investments if needed. Markets are volatile, and no investment is risk-free.
Benefits vs Tradeoffs
| Category | Benefits | Tradeoffs |
|---|---|---|
| Growth potential | Long-term wealth building | Short-term volatility |
| Accessibility | Easy to start | Easy to make mistakes |
| Flexibility | Wide investment choices | Requires research |
| Liquidity | Can buy/sell quickly | Prices can fluctuate rapidly |
Common Beginner Mistakes to Avoid
1. Buying Without Research
Jumping in based on hype instead of fundamentals
2. Trying to Time the Market
Even professionals struggle to predict short-term moves
3. Investing Too Much Too Fast
Start small and build gradually.
4. Ignoring Diversification
Owning only one stock increases risk. Diversifying helps reduce overall portfolio risk.
Real-World Example
Let’s say you invest $500:
- You buy shares of a growing company
- Over time, the company performs well
- Your investment increases in value
But if the company struggles, your investment could drop. That’s why long-term investing and diversification matter.
Quick Decision Guide
Want the easiest way to start? Open a brokerage account and buy a broad index fund
Have limited money? Use fractional shares
Want to reduce risk? Diversify across multiple stocks or ETFs
Looking for simplicity? Invest consistently instead of timing the market
Final Take to GO
Learning how to buy stocks is straightforward, but building wealth takes consistency. The process is simple: Open an account, fund it, do your research, then start investing.
What matters most isn’t timing the market; it’s staying invested over time and making smart, informed decisions.
Your next step: Start small, stay consistent and focus on long-term growth instead of quick wins.
How to Buy Stocks FAQ
- What is the first step to buying stocks?
- The first step is opening a brokerage account, which allows you to buy and sell stocks through an online platform.
- How much money do you need to start buying stocks?
- You can start with as little as a few dollars if your brokerage offers fractional shares, though many beginners start with a few hundred dollars.
- Is buying stocks risky for beginners?
- Yes. Stock prices can fluctuate, so there is always a risk of losing money, especially in the short term.
- Do you need a broker to buy stocks?
- You need a brokerage platform, but it doesn’t have to be a traditional human broker. Most investors use online brokerages.
- What is the best type of stock for beginners?
- Many beginners start with index funds or well-established companies because they are generally more stable and diversified.
- Can you buy stocks on your phone?
- Yes. Most modern brokerages offer mobile apps that allow you to buy and sell stocks quickly and easily.
Vance Cariaga, Elizabeth Constantineau, John Csiszar and Dawn Allcot contributed to the reporting for this article.
Our in-house research team and on-site financial experts work together to create content that’s accurate, impartial, and up to date. We fact-check every single statistic, quote and fact using trusted primary resources to make sure the information we provide is correct. You can learn more about GOBankingRates’ processes and standards in our editorial policy.
- Washington State Department of Financial Institutions "The Basics of Investing In Stocks"
- Consumer Financial Protection Bureau "Comparing Stock Investments"
- Securities and Exchange Commission "The Laws That Govern the Securities Industry"
