You cannot buy stocks online without going through some kind of broker
Every stock purchase in the United States goes through a broker — a firm licensed to execute trades on an exchange. There is no way around this requirement. What has changed is that brokers now come in different forms, and many let you open an account and trade directly from your phone or computer without calling anyone or paying per-trade commissions.
When people say they want to buy stocks "without a broker," they usually mean without a traditional full-service broker like Merrill Lynch or Morgan Stanley, which charge high fees and require large minimum deposits. The alternatives — discount brokers, robo-advisors, and direct stock purchase plans — all still use a broker behind the scenes, but they work differently and cost much less.
The choice between these routes depends on how much you want to invest, how often you plan to trade, and whether you want help picking stocks or want to choose them yourself.
Key Takeaways
- Every stock trade must pass through a licensed broker, but you can now open a brokerage account online with no minimum deposit and no per-trade fees at firms like Fidelity, Charles Schwab, or E*TRADE.
- Discount brokers let you buy individual stocks directly through their websites or apps, and most offer commission-free trading on stocks and exchange-traded funds.
- Direct stock purchase plans let you buy shares straight from a company, bypassing a brokerage account entirely, though you typically need to own at least one share first and the process is slower.
- Robo-advisors like Vanguard Personal Advisor Services or Betterment handle stock purchases for you automatically based on your goals, which costs less than a human advisor but more than a discount broker.
- Fractional shares, now offered by most online brokers, let you invest small amounts of money by buying a piece of a share rather than a whole one.
Opening a discount brokerage account online
A discount broker is a licensed firm that executes your trades but does not give personalized investment information. You pick the stocks, and they handle the transaction. Most discount brokers now charge zero commission per trade and have no minimum deposit to open an account.
The major discount brokers available online are Fidelity, Charles Schwab, E*TRADE, TD Ameritrade, Interactive Brokers, and Webull. Each has its own app and website. To open an account, you provide your name, address, Social Security number, and employment information. The process takes 10 to 15 minutes. You then link a bank account and transfer money into the brokerage account. Once the transfer clears — usually one to three business days — you can place your first trade.
After you log in, you search for a stock by its ticker symbol (like AAPL for Apple or MSFT for Microsoft), enter how many shares you want to buy, and confirm the order. The trade executes during market hours, usually within seconds. You own the shares when ready and can see them in your account.
The main differences between discount brokers are the research tools they offer, the quality of their mobile apps, and whether they charge fees for certain services like wire transfers or account maintenance. Most offer free stock research, educational videos, and paper trading (practice trading with fake money). Some, like Fidelity and Schwab, also offer checking accounts or money market funds tied to your brokerage account.
Buying fractional shares when you have a small amount to invest
Until recently, you had to buy whole shares of stock. If a stock cost $500 per share and you had $1,000, you could buy only two shares. The remaining $0 sat in cash. Fractional shares changed this: now most discount brokers let you buy a piece of a share, so you can invest any dollar amount.
If you have $100 and want to buy Apple stock trading at $150 per share, you can buy 0.67 shares instead of waiting until you have $150. This is useful when you are starting out with small amounts or when you want to invest a fixed dollar amount each month rather than a fixed number of shares.
Fractional shares work the same way as whole shares: you own them, they appear in your account, and you can sell them anytime. The main limitation is that some brokers do not offer fractional shares in all types of accounts, and a few still charge a small fee for fractional share trades, though most have eliminated this fee.
Using direct stock purchase plans to bypass a brokerage account
A direct stock purchase plan, or DSPP, lets you buy shares straight from a company or from a transfer agent (a firm that manages the company's shareholder records) without opening a brokerage account. You send money directly to the plan, and the company issues shares in your name.
The catch is that most DSPPs require you to own at least one share before you can enroll, so you typically buy your first share through a discount broker, then transfer it to the DSPP or enroll directly. Some companies let you buy your first share through the DSPP itself, but this is less common. Once enrolled, you can usually set up automatic monthly investments, and the company will buy shares for you on a set date each month.
DSPPs are slower than brokerage trades. Instead of executing in seconds, purchases may take several days or even weeks, depending on the company's schedule. Some companies batch purchases monthly; others batch them quarterly. You also cannot sell shares through a DSPP as quickly as through a broker — you typically have to request a sale and wait for it to process.
The advantage of a DSPP is lower fees. Many companies charge nothing or a small flat fee per transaction, which can be cheaper than a brokerage account if you are investing very small amounts very frequently. However, if you plan to trade often or need quick execution, a discount broker is better.
Comparing costs across different routes
| Route | Account Minimum | Per-Trade Commission | Other Fees | Speed |
|---|---|---|---|---|
| Discount broker (Fidelity, Schwab, E*TRADE) | $0 | $0 | Wire transfer or account maintenance fees vary; most waived | Seconds to minutes during market hours |
| Robo-advisor (Vanguard, Betterment) | $0 to $500 | $0 | 0.25% to 0.50% annual fee on assets under management | Automatic; trades execute daily or weekly |
| Direct stock purchase plan | $0 to $500 (for first share) | $0 to $10 per transaction | Varies by company; some charge enrollment or dividend reinvestment fees | Days to weeks; batched by company |
| Full-service broker (Merrill Lynch, Morgan Stanley) | $10,000 to $1,000,000 | $0 to $50+ per trade | Annual advisory fees 0.50% to 2.00% of assets | Same-day or next-day |
The cheapest route for most people is a discount broker with zero commissions and no minimum deposit. You pay nothing to open the account or place trades. The only fees you might encounter are wire transfer fees (usually $15 to $25 if you move money out) or account maintenance fees, but most brokers waive these if you maintain a minimum balance or set up automatic deposits.
Robo-advisors cost more than discount brokers because they charge an annual percentage fee (typically 0.25% to 0.50% of your total balance each year), but they handle all buying and selling for you. If you have $10,000 invested, you might pay $25 to $50 per year. This is still far cheaper than a full-service broker, which might charge 1% or more annually plus per-trade commissions.
Understanding what happens after you buy
Once you own shares, you have several choices about what to do with them. You can hold them indefinitely, sell them anytime the market is open, or set up automatic reinvestment of dividends (if the company pays them). Most brokers let you do all of this from your account dashboard.
Your shares are held in a brokerage account, which is a legal structure that protects your ownership. The broker holds the shares in your name, and you have full control. If the broker goes out of business, your shares are protected by the Securities Investor Protection Corporation (SIPC), which covers up to $500,000 per account.
When you sell shares, the broker sends you the proceeds, minus any applicable taxes or fees. Taxes on stock sales depend on how long you held the shares (short-term capital gains are taxed as ordinary income; long-term gains get a lower rate if you held for more than one year) and your income level. The broker will send you a tax form (Form 1099-B) at the end of the year showing all your sales.
Choosing between these options
If you want to pick individual stocks and trade frequently, open a discount brokerage account. The process takes 15 minutes, costs nothing, and gives you full control. Fidelity, Schwab, and E*TRADE are the largest and most established, but Webull and Interactive Brokers are also solid options if you want more advanced trading tools.
If you want to invest a fixed amount each month in a single company and do not need quick access to your money, a direct stock purchase plan may be cheaper. However, you still need to buy your first share through a discount broker first, so you are not truly avoiding brokers — you are just using them less frequently.
If you do not want to pick stocks yourself and prefer a hands-off approach, a robo-advisor is worth considering. You tell it your goals and risk tolerance, and it builds and rebalances a portfolio for you. This costs more than a discount broker but less than hiring a human advisor.
If you have a very large amount to invest and want personalized information, a full-service broker may make sense despite the higher fees. But for most people starting out, a discount broker is the best choice.
Frequently Asked Questions
Can I buy stocks without a Social Security number?
No. All brokers are required by law to verify your identity and tax status before opening an account. If you are not a U.S. citizen, you can still open an account with an Individual Taxpayer Identification Number (ITIN) instead of a Social Security number. Contact the broker directly to ask about their process for non-citizens.
What is the difference between a brokerage account and a retirement account?
A brokerage account is a regular investment account with no contribution limits and no tax advantages. You pay taxes on gains and dividends each year. A retirement account (like an IRA or 401(k)) has contribution limits and tax benefits, but you cannot withdraw money before age 59½ without a penalty. You can buy stocks in either type of account through the same brokers.
Do I need to have money in my account before I can place an order?
Yes. You must transfer money from your bank account into your brokerage account first. The transfer usually takes one to three business days. Some brokers offer margin accounts, which let you borrow money to buy stocks, but this is risky and not recommended for beginners.
Can I buy stocks during after-hours trading?
Most discount brokers let you place orders during extended hours (before 9:30 a.m. and after 4:00 p.m. Eastern time), but the orders may not execute until the regular market opens. Prices can be more volatile during after-hours trading, and some stocks have wider bid-ask spreads, meaning the difference between the buy and sell price is larger.
What happens if I want to sell my shares?
Log into your brokerage account, find the stock you own, enter how many shares you want to sell, and confirm the order. The trade executes during market hours, and the money appears in your account within one to three business days. You can then withdraw it to your bank account or use it to buy other stocks.