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If you're looking to save for life's biggest expenses like education, buying a house or retirement, the stock market — paired with a smart investment strategy — could be your new best friend.

The stock market is an important part of our personal finance ecosystem and can be a great way to build wealth and secure your financial future, but buying stocks can seem daunting, especially for beginners. There is an overwhelming amount of information out there about what to buy, how to buy and the associated risks.

Buying stocks doesn't have to be so challenging. Doing your homework, choosing the purchasing method that makes sense for you and implementing a smart investing strategy you can stick with will help you build wealth in the long run.

In this Money guide, we'll help you one step at a time, from deciding how much money you should invest, to maintaining your portfolio after you've hit "buy."

How to buy stocks:

1. Determine how much to invest
2. Choose what stocks to buy
3. Pick where to buy stocks
4. Place your order
5. Track and manage your portfolio
Frequently asked questions
Stocks to buy now
Summary of how to buy stocks

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1. Determine how much to invest

In order to know how much to invest, you need to know how much to save. Before you start investing, financial experts recommend that you build up an emergency fund so that if an unforeseen event hits — like losing your job — you're not scrambling to come up with cash. How much you need to save depends on your individual financial circumstances, including how much money you make and whether or not you're the sole breadwinner in your family. But typically, advisors say the fund should cover three to six months' worth of your expenses.

If you have debt, consider paying it down before you invest money in the stock market, especially if you have high-interest or variable-rate debt like an outstanding credit card balance. For many people, it makes sense to pay down debt if the interest rate is 6% or higher, according to Fidelity Investments.

In short, don't invest money that you might need within the next few years. The good news is you don't need a lot of money to buy stocks: You can start investing in the stock market with less than $1,000.

2. Choose what stocks to buy

Once you've determined how much money you're going to invest, it's time to choose what stocks to buy. There are many to choose from and various ways to buy them.

Individual stocks

You can buy stock in any company that is public, meaning that it sells shares on an exchange like the New York Stock Exchange. That includes companies you know about or use in your day-to-day life, like Walmart and Coca-Cola. But there are also tons of companies you likely haven't heard of that could fit well into your portfolio.

Researching individual stocks

Luckily, information on public companies is available online. Companies that sell shares to investors are required by regulators like the Securities and Exchange Commission (SEC) to publish regular reports about their activities, like an annual 10-K that outlines financial performance.

Every three months, public companies also report their earnings results for the last quarter with updates relevant to investors, like whether inflation is impacting the company's bottom line and whether sales of merchandise they make or services they provide have stalled. Companies also disclose different kinds of information that reflect performance — for example, Robinhood shares user data and Netflix shares its number of subscribers. You can sift through all this information when choosing which stocks to add to your portfolio.


If you don't want to pick individual stocks, it may be best for you to buy funds. In fact, financial advisors tend to like funds versus individual stocks because you're not putting all your eggs in one basket. One company might stumble while its competitor continues to grow, so if you own a fund that invests in both companies, your loss is mitigated because you benefit from the competitor's gains.

One option is to invest in a mutual fund, which can include thousands of stocks (or other assets, like bonds and commodities). Mutual funds tend to be managed by professionals, and you can buy or sell them once a day at that day's closing market price. Index funds are a type of mutual fund that aim to replicate a certain part of the market, like the S&P 500, or an individual sector like energy. Another type of fund — exchange-traded funds (ETFs) — holds the same types of assets as mutual funds, but investors are allowed to buy or sell them at any point throughout the trading day.

Researching funds

Fund companies like Fidelity Investments and BlackRock share information about their funds on their websites. You can read through why certain shares are included, the percentage of the fund they take up and performance. For example, here is Vanguard's page for its Vanguard Information Technology ETF. You can see that the fund "seeks to track the performance of a benchmark index that measures the investment return of stocks in the information technology sector." These types of fact sheets include share prices, past performance, all of the stocks included in the fund and more.

Another way to research individual stocks and funds is via research firms. Morningstar, for example, has a huge repository of data on different funds and stocks available, as well as ratings from Morningstar's analysts.

When researching mutual funds, look for ones with at least five years of strong performance and an "expense ratio" — a fee you'll have to pay — below 1%. ETF fees are generally lower than those of mutual funds. Many providers like Fidelity and Charles Schwab offer ETFs with expense ratios of less than 0.1%.

Fractional shares

If you don't want to buy a full share of a company, you can also buy fractional shares, which are slices of a share that cost as little as $1.

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3. Pick where to buy stocks

Before you can make a stock purchase, you have to determine how you'll actually buy these stocks. There's a lot to consider, including how hands-on you want to be, and how much you're willing to pay. With big investment companies like Vanguard, you can choose to open an individual retirement account (IRA) or an individual brokerage account that you fund with after-tax dollars.

Brokerage options

Whether you want total control over what you're investing in, or want someone (or something) else to do the work for you, there is a brokerage option that will fit your investing style. For most of the following investing pathways, be prepared to share basic information like your Social Security number and date of birth. You may also be asked about your employment situation and investing history. If you're not a U.S. citizen, you'll likely need to share passport or residency visa information. You'll also want to save statements and other documents from these people and platforms, since you'll need them come tax time (capital gains are taxed).

Financial advisor

A financial advisor is a professional money expert who can help you with retirement planning, paying down your debts, tax planning and more. They can also provide investment advice. There are several different kinds of financial advisors, including stockbrokers, who trade stocks on behalf of their clients, and certified financial planners, who are regulated by the CFP Board of Standards and help clients create long-term plans for managing their money. Some advisors are fiduciaries, which means they have to put clients' best financial interests ahead of their own financial gain.

Financial advisor pros and cons

  • May know the best strategies to apply to your investing plan
  • Can help you research investments that make sense for you
  • Provides peace of mind
  • Can be expensive
  • You need to take the time to adequately research advisors
  • Not all financial advisors are fiduciaries, which means they may try to sell investment products and financial products that benefit them

Online broker

Online brokerages execute trading orders — like buying and selling stocks and funds — for their customers. Popular online broker platforms include Charles Schwab and Fidelity Investments, and Money has a full list of the best online trading platforms.

Online broker pros and cons

  • Low fees and many options for commission-free stock trading
  • Can execute trades very quickly and with flexibility
  • May provide access to online tools and educational resources
  • You have to select investments without personal help from a professional
  • Up to you to understand exactly how the online broker works so you don't make errors
  • You are in charge of rebalancing your portfolio and making sure your asset allocation fits your goals


Robo-advisors are automated investment advisors. If you use one of these programs, it will ask you for information about your financial situation, investment goals and risk tolerance, then use algorithms to create a portfolio with a diversified mix of stocks and bonds.

Robo-advisor pros and cons

  • Affordable due to low management fees and low or no account minimums
  • Automatic rebalancing
  • Will choose investments for you based on questionnaire you fill out
  • Advice is fairly generalized
  • No or limited interaction with a human
  • Limited ability to customize your investments

App trading

Trading apps that allow you to buy and sell stocks, bonds, funds and often cryptocurrency via your smart phone have become ubiquitous in recent years. Robinhood, Webull and E*TRADE are popular examples. To protect your investments, make sure you're using an app that is registered with regulatory agencies like the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) by visiting the SEC's Investment Adviser Public Disclosure or FINRA's BrokerCheck.

App trading pros and cons

  • Low fees and many options for zero-commission trading
  • Can execute trades very quickly and with flexibility
  • Tools like charts and data let you do your own research on investments
  • While these apps tout free trading, they're not exactly free
  • Can be addictive
  • Up to you to understand exactly how the apps work so you don't make errors

4. Place your order

If you are working with a stockbroker or financial advisor who is managing your investments, they'll likely take care of buying stocks for you. Robo-advisors also do a lot of the hard work. Usually, they ask you to tell them how much you want to invest, your long-term investment goals, time horizon and risk tolerance. Once you deposit money, the robo-advisor automatically invests that money in the market, then manages your portfolio.

But if you're using an online broker or trading app, you'll have to place the orders yourself. These trading platforms tend to have step-by-step guides on how to actually place orders once you've deposited money into your account (which can take a few days if you're connecting a bank account). While some of these platforms offer more advanced moves, like options trading, experts recommend that you master buying and selling stocks before taking on more complex investments.

The language and layout of these platforms vary, but most have some common features. For instance, you can type in the name of a company or its stock ticker (the unique abbreviation a company gets when trading on an exchange, like TSLA for Tesla), which will bring you to that company's page where you can find information like performance and stock prices, as well as a button that says, "Trade."

Then, you'll need to choose the dollar amount or number of shares you want to buy as well as the order types you want to place. For instance, a market order will buy the stock at the current best available price — it typically ensures the order will be executed, but doesn't guarantee a specific price. A limit order places a restriction on the maximum price you're willing to pay, meaning that the trade will only be executed if it can be done so at the price you specify or better. A stop order allows a trade to go through once a stock is trading at or below a specific price; if the stock never meets that price, the trade isn't executed.

Finally, you'll be asked to review your order. Take a close look and make sure the details are correct before confirming the purchase.

5. Track and manage your portfolio

You can't just stop at buying stocks — now you have to manage your portfolio.

If you went the financial advisor or robo-advisor route, much of the work of maintaining your portfolio will likely be done for you. But if you used an online broker or trading app, you're going to need to regularly check in on your portfolio and make sure it's still meeting the goals you set when you first started buying stocks.

Diversification is a critical part of managing a portfolio. A diversified portfolio will have a mix of stocks, bonds and cash that aligns with your goals and risk tolerance. Within each of those asset classes, you should have diversification as well. The benchmark S&P 500 Index contains 11 industry sectors, and experts say it's a good idea to have stocks from a wide range of different industries in your portfolio. You should also have different company sizes and locations represented in your portfolio: large-cap, mid-cap and small-cap stocks, as well as both U.S. and international businesses. There are also different kinds of stocks to include, like growth stocks and value stocks.

If you invest solely in funds, some of this diversification will be done for you, but if you want to buy individual stocks, experts say having at least 20 in your portfolio is a good rule of thumb. A diversified portfolio ensures that even if one area of your portfolio tanks, you won't lose everything, since assets perform differently depending on market conditions.

Once you have a diversified portfolio, you have to maintain it to help make sure you'll see investment returns over the long-term. Financial advisors recommend regularly rebalancing your portfolio, which means buying or selling assets so your portfolio allocations are in line with your investment plan.

Online platforms tend to have tools like stock screeners, along with a lot of real-time and historic performance data to help you track how your portfolio performs. That said, financial advisors recommend that you resist the temptation to constantly fiddle with your portfolio — especially not based on headlines or your emotions. Market volatility is normal, so don't focus on the short term. As Warren Buffet told shareholders in a letter in 1996, "If you aren't willing to own a stock for 10 years, don't even think about owning it for 10 minutes."

A diversified portfolio with a strong plan that you put in place and stick to is a time-tested way to build wealth in the stock market.

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Frequently asked questions

How old do you have to be to buy stocks?

Generally, you have to be 18 years old to open a brokerage account. However, many popular platforms like Fidelity and Charles Schwab allow teenagers to open custodial accounts with an adult's oversight, which the adult will manage until the teen can take over once they turn 18.

Do you need a broker to buy stocks?

Nowadays, you don't need a broker to buy stocks. Online brokers, robo-advisors and trading apps have surged in popularity and allow you to buy and sell stocks on your smartphone.

Stocks to buy now

The exact stocks and funds that will fit into your portfolio is dependent on your own financial situation, including your goals and risk tolerance. But if you're curious about some cult stocks investors can't get enough of, check out our guides below.

These are not recommendations, but guides on how to buy some of the most sought-after and popular stocks in case you choose to do so.

How to buy Amazon stock

How to buy Peloton stock

How to buy Disney stock

How to buy Apple stock

How to buy Tesla stock

How to buy IPO stock

How to Buy marijuana stocks

Summary of how to buy stocks

  • Determine how much money you want to invest. Before you start, make sure you have an emergency fund that can cover three to six months of your expenses, and that you've paid down high-interest debt.
  • Do your research. Use company reports and sites like Morningstar to determine which stocks and funds make the most sense to include in your portfolio.
  • Decide whether you'd like to invest via a financial advisor, online broker, robo-advisor or trading app.
  • Buy stocks by placing orders on the platform you choose.
  • Use that platform to track how your stocks are doing and maintain a diversified portfolio. Remember: Don't get caught up in headlines and daily market fluctuations.

More from Money:

How to Invest in the S&P 500

7 Best Online Stock Trading Platforms of 2022

Fidelity Review 2022

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