I want to start buying stocks. Where do I start?

Investing, Stocks
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April 2005
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In order to buy stocks, you can either use an online broker, or seek the assistance of a stockbroker who is licensed to purchase securities on your behalf. 

Online Brokers

Most people these days use online brokerages rather than traditional human stockbrokers. For online brokerages, the cost is usually based on a per transaction or per share basis, allowing you to open an account with relatively little money. Popular online brokers include TD Ameritrade, Charles Schwab, E*Trade, and Optionshouse. They are easy to use. You sign up for an account online and transfer funds into it, kind of like opening a bank account, only much simpler. Once your account has funds in it, you can place an order. You can either pick the stocks you know you want, or use the search feature to filter stocks by criteria. Most online brokerages work in a way similar to the Investopedia Stock Simulator, explained in this helpful article. 

Full-service Brokers

Full-service brokers are the 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 assist with estate planning, tax advice, retirement planning, budgeting and any other type of financial advice, hence the term "full service". They can help you manage all of your financial needs now and for the rest of your life, if need be. 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 in having a professional financial advisor by your side can be well worth the additional costs - accounts usually can be set up with as little as $1,000.

Money managers are somewhat like financial advisors but may take full discretion over a client's account (hence the term "manager"). These highly skilled investment professionals usually handle very large portfolios of money and thus, charge hefty management fees based on the assets under management and not per transaction. They are basically for those with substantial incomes, who would rather pay someone to fully manage their investments while they're out playing golf. Minimum account holdings can range from $100,000 to $250,000 or more.

For those keen to learn what stock trading is all about without spending hundreds or thousands of dollars, you can sign up for a free Investopedia Simulator account. It is a simulated online broker account for users, who are given US$100,000 in pretend money, to practice investing strategies or to simply learn how to trade stocks and options in real companies in the stock market.  You should also sign up for our free Investing Basics newsletter to learn more about how to invest.

Are you looking to learn more about investing in stocks? Investopedia's Advisor Insights tackles the topic by answering one of our user questions. 

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