How to buy shares online

You've probably imagined many times how you're going to buy shares in a company and make enough money to travel the world and last you for the rest of your life. Achieving this is not easy, but you have to start somewhere. You don’t need huge amounts of money to start your investing journey, some people start with $100 or less. More and more brokers even allow buying fractional shares. And the good news is you that can do all of this completely online, from the comfort of your own home.

In this article, we will explain jargon-free, in plain English, how to buy shares in a company.

People usually ask about how to invest in a company because they either want to make money (profits) or gain some trading experience. Both are possible, and can also be fun, if you select the right stocks.

You can make a profit if your share pays dividends or its price increases. If you do this in the long run, these profits can add up and even make you a millionaire, as it happened with Mr. Gremel: the now 98-year-old investor bought 20 Walgreens shares for $1,000 in 1953, and today they are worth $2 million.

As you gain experience, you will improve your financial literacy. This is one of the best long-term investments. Have your friends ever talked about investments or the stock market, and you had no clue what any of it meant? Don't worry, once you start investing and learning more about it, this won't happen again. You'll understand better how the stock market works and how it influences the economy, as well as your everyday life.

Last but not least, as a shareholder you will be part of a company's story. Have you ever wanted to sit in the same room with Warren Buffet, and participate in a Berkshire Hathaway annual meeting?

Let's take a look at the six steps for how to buy shares online!

Buying shares online is not rocket science. Follow this simple six-step plan:

1. Find a good online broker
2. Open an investment account
3. Upload money to your account
4. Find a stock you want to buy
5. Buy the stock
6. Review your share positions regularly

Step 1: Find a good online broker

First of all, you need to find a good online broker. BrokerChooser will help you here: get a free recommendation by answering just a few questions, or read further to get a general broker recommendation.

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When recommending a broker, we take into account the broker’s fees, trading platform, accessible markets to trade, and how easy it is to open an account. Safety is also very important, but since we recommend only safe brokers, you don't have to worry about this.

Step 2: Open an investment account

After finding your online broker, you need to open an investment account. This can usually be done online. The investment account is basically what you need to start buying shares online. Think of it as a bank account where in addition to holding cash, you can also hold shares. Opening an online brokerage account usually takes a couple of days, although at some brokers you can get it done within a day.

Step 3: Upload money to your account

In order to buy shares online, you need to have money on your investment account.

Minimum deposits can be as low as $20. At some brokers, you can buy fractional shares, so if for example one Amazon share is priced over $2000 and you only want to invest $500, you can still do it.

Usually, you can choose between a bank transfer (ACH) or depositing funds via credit/debit card. At some brokers, you can fund your investment account even via Paypal, e.g. at eToro.

Compare broker deposits

Step 4: Find a stock you want to buy

You can get inspiration from others' ideas or you can do your own research. For example you could choose to buy into some stocks that Warren Buffett owns. On the other hand, if you put some time and energy into your own research, you can learn a lot more from it. Investment ideas can come from your broker in the form of stock reports and analyses, but you can also use independent research. The financial news and investment courses can also be useful in learning how to pick a winning stock.

Step 5: Buy the stock

You have the account, the cash, and the stock you want to buy. Now all you need to do is press the 'Buy' button. You log in to your online trading platform, find the stock you have selected, enter the number of shares you wish to buy, and click 'Buy,' which will initiate the purchase of shares. Alternatively, you can also just select how much you’d like to spend on the given stock.

When placing an order, you can choose from different order types. A market order buys immediately at the current market price, while a limit order allows you to specify the exact price at which you want to buy the shares. Find more details on order types here.

Step 6: Review your share positions regularly

You're done, you've bought the shares, they are yours. Now it is key to monitor your investments.

If you bought the shares with the goal of holding for a longer term, you don’t need to check the price movements every day but you might want to check the quarterly or yearly reports and company guidance. This basically means reviewing your investment strategy from time to time.

For short-term buyers, position management could mean setting up a stop-loss price of where to cut losses, and the target price of where you want to sell the shares with a profit.

Now that you have mastered the 6 steps of buying shares, take a moment to look at the top 5 brokers we have selected for you.

As we live in the internet era, trading nowadays takes place on online platforms. Trading floors have turned into well-designed tech platforms with interactive tools and charts.

If you're just starting to explore how or where to buy shares online, we recommend that you pick one of the following five brokers:

1. Interactive Brokers, US discount broker
2. Fidelity, US stockbroker
3. Zacks Trade, US discount broker
4. TD Ameritrade, US-based stockbroker
5. E*TRADE, US stockbroker

What makes these brokers a good place to buy shares? The most important selection criteria were the availability of easy-to-use web and mobile trading platforms and fair fees. Other factors we considered were the availability of great educational tools, an easy account opening process, and multiple options for deposit/withdrawal.

Below is a table comparing the quality of the most important factors, i.e. web/mobile platforms and fees for each broker:

Now let's check in detail the fees charged by the best brokers for buying shares online:

All spreads, commissions and financing rates are for opening a position, holding for a week, and closing.

Not sure which broker? For a tailored recommendation, check out our broker finder tool. You can enter your country and it will show only those brokers that are available to you. Want more details? Compare brokers with the help of this detailed comparison table.

Now, let's see some more details about the best brokers for buying shares.

Interactive Brokers was founded in 1978 and is one of the biggest US-based discount brokers. The broker is regulated by several financial authorities globally, including top-tier ones like the UK's Financial Conduct Authority (FCA) and the US Securities and Exchange Commission (SEC).

As it has licenses from multiple top-tier regulators, Interactive Brokers is considered safe. Having a long track record and publicly disclosed financials while being listed on a stock exchange are also great signs for its safety.

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#1 Interactive Brokers
Web trading platform

4.5

Interactive Brokers's web platform is simple and easy to use, even for beginners.

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#1 Interactive Brokers
Mobile trading platform

3.8

The Interactive Brokers mobile trading platform has a lot of functions and a useful chatbot, but its user interface could be better.

Interactive Brokers stock trading app is available on both iOS and Android.

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Fidelity is a US stockbroker founded in 1946. It is regulated by top-tier authorities like the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).

Fidelity is considered safe because it has a long track record and is regulated by top-tier financial authorities.

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#2 Fidelity
Web trading platform

4.5

Fidelity's web platform is easy to use, has many order types and provides two-step authentication. On the negative side, it is not customizable.

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#2 Fidelity
Mobile trading platform

4.5

Fidelity has a great mobile trading platform. It is user-friendly and well-designed, but lacks a two-step login.

Fidelity stock trading app is available on both iOS and Android.

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Zacks Trade is a US-based discount broker and a division of LBMZ Securities. LBMZ Securities was founded in 1978 and is regulated by the top-tier US financial authorities SEC and FINRA.

LBMZ Securities's clearing and execution services are provided through Interactive Brokers, a global stockbroker regulated by many top-tier financial authorities globally.

If you're familiar with the services of Interactive Brokers, you might notice that many of Zacks Trade's services are the same. To sum up:

• Zacks Trade has its own, different fee structure, product selection, educational tools and customer support.
• The account opening and deposit/withdrawal processes, trading platforms and research tools are the same as at Interactive Brokers.

Zacks Trade is considered safe because it has a long track record and is overseen by top-tier regulators. 

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#3 Zacks Trade
Web trading platform

4.5

The Zacks Trade web platform is simple and easy to use even for beginners.

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#3 Zacks Trade
Mobile trading platform

3.8

The Zacks Trade mobile trading platform, called Handy Trader, has a lot of functions and a useful chatbot, but its user interface could be better.

Zacks Trade stock trading app is available on both iOS and Android.

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This TD Ameritrade Review concludes that it is recommended for investors and experienced traders looking for solid research and a well-equipped desktop trading platform, the Thinkorswim platform.

It is one of the biggest US-based stockbrokers founded in 1975. As an online broker it is regulated by top-tier authorities like the Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA) and the Commodity Futures Trading Commission (CFTC).

It is considered to be a safe broker as it has a long track record, is listed on a stock exchange, has a banking background, discloses its financials, and is overseen by top-tier regulators.

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#4 TD Ameritrade
Web trading platform

4.3

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#4 TD Ameritrade
Mobile trading platform

4.8

The TD Ameritrade mobile app is great. It is user-friendly and well-designed.

TD Ameritrade stock trading app is available on both iOS and Android.

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E*TRADE is a US-based stockbroker founded in 1982. It is regulated by top-tier financial authorities like the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).

E*TRADE is considered safe because it has a long track record, is listed on a stock exchange, has a banking background, discloses its financials, and is overseen by top-tier US regulators.

In February 2020, E*TRADE was acquired by Morgan Stanley. To find out more about the motives behind the acquisition and about the wider market context, check out this article we wrote about the deal.

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#5 E*TRADE
Web trading platform

4.5

E*TRADE has a great, user-friendly web trading platform, offering a clear fee report among others. On the negative side, it cannot be customized.

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#5 E*TRADE
Mobile trading platform

4.5

E*TRADE's mobile trading platform is one of the best on the market. It's very easy to use and offers a lot of features.

E*TRADE stock trading app is available on both iOS and Android.

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When you buy shares in a company you become a shareholder, i.e. an owner of that company in a very small percentage.

For example, Tesla has 185 million shares to buy (outstanding). When you buy 100 Tesla company shares, you will be one of the owners of Tesla. Your ownership percentage will be very tiny, 0.000055% (100/185 million), but still, you will be an owner with all the rights that come with this ownership:

• The right to receive dividends - when the company allocates dividends, you will receive a part of this. Staying with the previous Tesla example, let’s assume that in 2020 Tesla will pay $100 million in dividends, then you will receive $55 (0.000055%*100 million).
• The right of voting - if you are a shareholder of a company, you have the right to participate at the company's annual meeting. At the annual meeting, you will have the right to vote on the topics that will fundamentally influence the future of the company. These topics can vary from the election of the board of directors to the amount of the dividends allocated.

Speaking about financial literacy: when you read about buying shares online, you may find that both the expressions stock and share are used. What is the difference between them? The word stock is the general term for company ownership. For example “I invest in American tech stocks like Apple and Facebook”. Share usually refers to the ownership stake in a company. For example “Yesterday I bought 100 Tesla shares.”

Investments always come with some risks that you should aim to manage (click here to read more about market risk and other types of risks). Below, you can find the most common ones and our advice on how to mitigate them.

Avoid the scams

Risk: Unfortunately, tons of scam “brokers” are out there on the market trying to steal your money. When you see ads for binary options trading or automated investment algorithms that generate outstanding returns, start to get very suspicious. In these cases, the best thing to do is to ignore these ads.

How to manage it: When buying shares online, go with our broker selection. We have an active account with the brokers we selected and we test them regularly.

Diversify your portfolio

Risk: If you put all of your savings in just one or two stocks, and the company you selected goes bust, you could lose all your invested money. A similar risk is when the majority of your stock holdings are in the same industry.

How to manage it: Diversify your investment portfolio. This practically means buying many different shares and not putting all your eggs in one basket.

Avoid crappy stocks

Risk: when buying individual stocks, there is always a risk of selecting the wrong ones. Here, 'wrong' could mean anything from a company that defaults to just buying an overpriced share.

How to manage

Learn: This is the tricky part, since you need some knowledge and experience. The best is to start learning by reading books on investment and taking online courses. There are tons of great books out there, but you can start with the Intelligent Investor by Benjamin Graham. This is also the book on investment most recommended by Warren Buffet.

Gather information: While you are learning, start collecting as much information about your target companies as possible. Read the company presentations and quarterly reports on their website (usually found in the IR -Investor Relations- section), understand their business profiles, start playing around with their income statements, gain some knowledge about their management background or even attend their annual meetings. These will help you gain a better understanding of the company and the specific industry.

Compare multiples: When it comes to pricing, use industry multiples as a proxy for your target stock. P/E is a basic multiple, but each sector has its own favorite.

Since you are trading with your savings, it is very important to pay attention to safety. The online brokers we selected have some of the best protection schemes, the level of which depends on the regulatory body of the broker (learn more about investor protection).

You can compare the protection amount among all reviewed brokers.

Compare protection amounts

Tip: Use national tax free accounts

In your country of residence, you may have the option to open special investment accounts that offer favorable tax conditions. For example, in the UK, this account is the ISA, the Individual Saving Account, which is exempt from income tax and capital gains tax on the investment returns. In the US, individual retirement accounts (IRA) offer many benefits.

"How to buy shares in a company? How to invest in shares? Where to buy shares!" - Were these things you were asking until now?

Just follow these six easy steps to buy shares online:

1. find a broker
2. open an account
3. fund the account
4. find the stock
5. buy the shares
6. review your position

It may look tricky at first, but all you need to do is go step by step. See you at the next Coca-Cola or Berkshire annual meeting!

If you're still in doubt about which broker to choose, we compiled a brief summary to help: