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How to Invest in Stocks Investing in a Stock Account Provides Funds

There are a variety of accounts and platforms that can be used to purchase stocks. You can buy stocks yourself through an online brokerage firm, or you can hire a financial advisor or robo-advisor to buy stocks for you. The best approach will be aligned with how much effort and guidance you want to put into managing your investments.

1. Open a brokerage account. If you have a basic understanding of investing, you can open an online brokerage account and purchase stocks. A brokerage account puts you in the driver’s seat when it comes to selecting and purchasing stocks.

2. 2. Hire a financial advisor. If you want more advice and guidance on stock purchases and other financial goals, consider hiring a financial advisor. A financial advisor helps you specify your financial goals and then purchases and manages your investments for you, including the purchase of stocks. Financial advisors charge a fee, which can be a flat annual fee, a per-transaction fee, or a percentage of the assets they manage.

Investing Stocks
Investing Stocks

3. 3. Choose a robo-advisor. A robo-advisor is a simple, very inexpensive way to invest in stocks. Most robo-advisors invest your money in a portfolio of different ETFs, and they buy the assets and manage the portfolio for you. They are usually cheaper than a financial advisor, but you rarely have a live person to answer questions and guide you through your choices.

4. Use a plan that buys stocks directly. If you’d rather invest in just a few stocks, many blue-chip companies offer plans that allow you to buy their shares directly. Many plans offer commission-free trading, but they may require other fees when you sell or transfer shares.

How to fund an investment stock account
If you plan to buy stocks through a retirement account (such as an IRA), you may want to set up a monthly recurring deposit. For example, the contribution limit for an IRA in 2020 is $6,000 for those under age 50 and $7,000 for those over age 50. If the goal is to reach the maximum contribution limit in that year, you can set up a recurring deposit of $500 per month to reach that maximum.

There are a few things to keep in mind when setting up your investment budget and funding your stock investment account.

1. Minimum purchases for mutual funds. Many stock mutual funds have a minimum initial purchase amount. Be sure to research different options – Morningstar is a great resource for finding funds with no minimums or minimums to start investing in stocks as soon as possible.
2. Trading commissions. If a brokerage account charges trading commissions, you may want to consider increasing your balance to buy stocks, especially individual stocks, until the commission is a fraction of the amount you invested.
3. Mutual fund fees. When purchasing a stock mutual fund, be sure to review what the “load” of the stock you are purchasing is. Some mutual funds charge an upfront or post-sale fee, known as a load, on the purchase or sale of a stock. While not all mutual funds have loads, being informed before you buy can help you avoid unexpected fees.

Published inStock Investment

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