You need a brokerage account, money to invest, and a plan for what to buy

Starting to invest in stocks means opening an account with a brokerage — a company that lets you buy and sell shares. You'll fund that account with money, then place orders to purchase individual stocks or funds that hold many stocks at once. The whole process takes a few hours to set up, though the actual buying happens in minutes once your account is open and funded.

Most brokerages today have no minimum deposit requirement and charge no commission per trade, which makes the barrier to entry much lower than it was ten or twenty years ago. You can start with whatever amount you're comfortable putting in — whether that's $100 or $10,000. The key is understanding the three steps: opening an account, funding it, and then deciding what to buy.

Key Takeaways

  • A brokerage account is where you hold and trade stocks; popular options include Fidelity, Charles Schwab, E*TRADE, and Robinhood, each with slightly different features and interfaces.
  • You'll need to verify your identity and provide tax information (your Social Security number) when opening an account, which takes 10 to 15 minutes.
  • Funding your account typically happens through a bank transfer, which can take one to three business days to settle before you can buy stocks.
  • Beginners often start by buying index funds or ETFs (funds that track a market index) rather than individual stocks, because they spread your money across many companies at once.
  • Once you place an order to buy a stock, it executes during market hours (9:30 a.m. to 4 p.m. Eastern time on weekdays), and you own the shares when ready.

Choosing a brokerage and opening your account

A brokerage is straightforward a licensed company that holds your money and executes your buy and sell orders. The major ones — Fidelity, Charles Schwab, E*TRADE, TD Ameritrade, and Robinhood — all offer similar core features: no commission on stock trades, no account minimums, and mobile apps. The differences are mostly in the interface, research tools, and customer service quality. If you're new to this, Fidelity and Charles Schwab are known for beginner-friendly platforms and educational resources.

To open an account, you'll go to the brokerage's website, click "Open an Account," and fill out a form with your name, address, date of birth, and Social Security number. The brokerage uses this information to verify your identity and comply with tax reporting rules. The whole process takes about 10 to 15 minutes. You'll also choose what type of account you want — a standard taxable brokerage account is the simplest choice for most beginners, though you may also hear about IRAs (retirement accounts) later.

Once you submit your process, most brokerages approve you within minutes or hours. You'll receive a confirmation email with your account number and login credentials. At this point, your account exists but is empty — you haven't put any money in yet.

Funding your account with a bank transfer

After your account is open, you need to move money into it so you have cash to buy stocks. The standard way is a bank transfer — you link your checking or savings account to your brokerage account and transfer money electronically. This is free and takes one to three business days to complete.

To set up a transfer, log into your brokerage account and look for a "Deposit" or "Fund Account" button, usually in the account settings or dashboard. You'll enter your bank's routing number and your account number (both appear on the bottom left of your checks, or you can find them in your bank's app). The brokerage will then initiate a transfer from your bank account to your brokerage account. During this time, the money is in transit and you cannot yet buy stocks.

Once the transfer settles — typically one to three business days later — the cash appears in your brokerage account and you're ready to buy. Some brokerages offer faster settlement if you use certain banks or transfer methods, so check their website for details. A few brokerages also let you deposit a check by photograph or wire money directly, but bank transfer is the most common and straightforward method.

Understanding stocks versus funds as your first purchase

Once you have cash in your account, you face a choice: buy individual stocks (shares of a single company like Apple or Microsoft) or buy funds (which hold many stocks in one package). For beginners, funds are usually the better starting point because they spread your money across dozens or hundreds of companies, which reduces the risk that any single bad choice will hurt you badly.

An index fund or ETF (exchange-traded fund) is a fund that tracks a market index — a pre-made list of stocks. The S&P 500 index, for example, includes 500 large U.S. companies. If you buy an S&P 500 index fund, you own a tiny piece of all 500 companies. Popular beginner-friendly index funds include the Vanguard S&P 500 ETF (ticker: VOO), the Fidelity S&P 500 Index Fund (ticker: FXAIX), and the Schwab U.S. Broad Market ETF (ticker: SWTSX). These all track roughly the same group of companies and charge very low fees.

Individual stocks are riskier because you're betting on one company's performance. If you do want to buy individual stocks, start small — maybe 5 to 10 percent of your account — and only buy companies whose business you understand. Many beginners make the mistake of buying stocks based on a tip or a news story rather than thinking through whether the company is actually a good long-term investment.

Placing your first stock order

When you're ready to buy, log into your brokerage account and look for a "Trade," "Buy," or "Order" button. You'll enter the stock ticker symbol (a short code like AAPL for Apple or VOO for the Vanguard S&P 500 ETF), the number of shares you want to buy, and the order type. For a beginner, a market order is the simplest choice — it buys the stock at whatever the current market price is, and it executes almost when ready during market hours.

The brokerage will show you the current price and calculate the total cost (price per share times number of shares). Review this carefully, then click "Confirm" or "Submit Order." If you're placing the order during market hours (9:30 a.m. to 4 p.m. Eastern time on a weekday), it executes within seconds and you own the shares when ready. If you place an order after market hours or on a weekend, it will execute the next time the market opens.

Once the order is complete, your brokerage account will show your new holdings. You now own those shares and can watch their price change throughout each trading day. You can sell them anytime the market is open, or hold them for years. Most beginners benefit from holding for the long term rather than trading frequently.

Setting up automatic investments to build your portfolio over time

Many brokerages let you set up automatic investments — regular transfers of money from your bank account to your brokerage account, followed by automatic purchases of a stock or fund you choose. This is called dollar-cost averaging and is a popular strategy for beginners because it removes emotion from the process and spreads your purchases across different market prices over time.

For example, you might set up an automatic $500 transfer every month, with instructions to buy $500 of an S&P 500 index fund. Each month, the money transfers, settles, and automatically buys shares at whatever the price is that day. Over a year, you've invested $6,000 without having to think about it or worry about whether you're buying at the "right" time. This approach works well if you have a steady income and want to build wealth gradually.

To set this up, look for "Automatic Investment," "Recurring Investment," or "Dividend Reinvestment" in your brokerage's settings. You'll specify the amount, the frequency (weekly, monthly, etc.), and the stock or fund to buy. Most brokerages let you pause or cancel this anytime, so there's no lock-in.

Watching your investments and understanding what happens next

After you buy stocks, you'll see them listed in your account with the current price, your purchase price, and your gain or loss (the difference between what you paid and what it's worth now). Stock prices change throughout each trading day, so your account value will fluctuate. This is normal and expected — don't panic if your holdings drop 5 or 10 percent in a week. Market swings are part of investing.

Your brokerage will send you statements (usually monthly or quarterly) showing all your transactions and your account balance. You can also log in anytime to check your holdings. Some brokerages offer research tools, news feeds, and educational articles to help you learn more about the stocks you own or are considering buying.

If your stocks pay dividends (cash payments that some companies distribute to shareholders), your brokerage will deposit that money into your account. You can then reinvest it by buying more shares, or leave it as cash. Many beginners set up automatic dividend reinvestment so the money buys more shares without them having to do anything.

Frequently Asked Questions

What's the minimum amount of money I need to start investing in stocks?

Most brokerages have no minimum deposit, so you can start with $100, $500, or whatever you're comfortable with. Some funds require a minimum first purchase (often $1,000 or $2,500), but many popular index funds have no minimum. Check the specific fund's details on your brokerage's website.

Can I buy stocks on my phone?

Yes. All major brokerages have mobile apps where you can fund your account, search for stocks, and place orders just as easily as on a computer. The process is identical — you log in, enter the ticker symbol, choose your quantity, and confirm the order.

What happens if I sell my stocks for more than I paid?

The profit is called a capital gain, and you'll owe taxes on it. If you held the stock for more than a year, it's taxed at a lower rate (long-term capital gains). If you held it for less than a year, it's taxed as ordinary income. Your brokerage will send you tax forms at the end of the year showing all your gains and losses.

Do I need to pick individual stocks or can I just buy index funds?

You can absolutely stick with index funds and never buy an individual stock. Many experienced investors do this because index funds are straightforward, diversified, and have lower fees. Individual stocks require more research and carry more risk, so they're optional, not required.

How long does it take to see a return on my investment?

Stock prices move daily, so you'll see gains or losses when ready after you buy. However, the stock market is volatile in the short term and tends to reward patience. Most financial advisors recommend holding stocks for at least five to ten years to smooth out the ups and downs and give your money time to grow.