You've now learned what a stock is and a little bit about the principles behind the stock market, but how do you actually go about buying stocks? Thankfully, you don't have to go down into the trading pit yelling and screaming your order. There are two main ways to purchase stock:
1. Using a Brokerage
The most common method to buy stocks is to use a brokerage. Brokerages come in two different flavors. Full-service brokerages offer you (supposedly) expert advice and can manage your account; they also charge a lot. Discount brokerages offer little in the way of personal attention but are much cheaper.
At one time, only the wealthy could afford a broker since only the expensive, full-service brokers were available. With the internet came the explosion of online discount brokers. Thanks to them nearly anybody can now afford to invest in the market.
2. DRIPs & DIPs
Dividend reinvestment plans (DRIPs) and direct investment plans (DIPs) are plans by which individual companies, for a minimal cost, allow shareholders to purchase stock directly from the company. Drips are a great way to invest small amounts of money at regular intervals.
InvestingLearn about the advantages of dividend reinvestment programs and how they may benefit longer-term investors who want to build a position in a company.
InvestingKnow the four main avenues of buying and selling investment instruments.
Financial AdvisorFiguring out what kind of broker to use can be a daunting task. The key is figuring out just how much help you need.
TradingThis important investment decision happens before you pick your first stock. Find out how to get it right.
InvestingA discount broker is a stockbroker that does not offer clients investment advice, but trades shares for a smaller commission than a full-service broker.
InvestingA brokerage account is a contractual arrangement between an investor and a licensed securities broker or brokerage.
InvestingFind out what fees and restrictions need to be considered before investing $1,000.