We are pretty sure you already imagined several times to invest in the stock exchange and gain enough money to travel the world and rest for your entire life. Achieving this is not easy but you have to start somewhere. To purchase shares online is one of the best ways to reach this goal. The good news is you can do this fully online.

In this article, we will explain jargon-free how to invest in shares online. It is not as easy as watching TV series but don’t worry it is not rocket science either.

People mostly ask how to buy and sell shares online because they would like to make a profit or gain 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 make you even a millionaire, as it happened with Mr. Gremel. The 98-year-old Mr. Gremel bought 20 Walgreens shares for $1,000 in 1953 and this worths today $2 million.

As you gain experience, you will improve your financial literacy. This is one of the best long-term investments. Have your friends talked about investments or the stock market and you had no clue about it? Do not worry, once you start investing and learning about it, this will not happen again. You will understand better how the stock market works and how it influences the economy and your everyday life. Want to know how to buy company shares?

Last but not least, as a shareholder you will be part of a company's story. Have you ever wanted to participate in a Berkshire Hathaway annual meeting? If you buy some Berkshire shares, you will have the opportunity, just have to master the buying of shares.

Let's take a look at the six steps to buy shares online.

The six-step plan to buy shares online

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

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 a few questions, or read further to get a general broker recommendation.

Free broker recommendation

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 highly important, but since we recommend only safe brokers, you do not have to worry much here.

Step 2: open your investment account

After finding your online broker, you need to open your investment account. This is usually an online process. The investment account is basically what you need to start buying shares online. Imagine again as a bank account, but apart from holding cash on it, you can also hold shares. The account opening usually takes a couple of days, but at some brokers, you can do it within a day.

Step 3: upload money to your account

For buying shares online, you need to have money in your investment account. Usually, you can choose between bank transfer and funding via credit/debit card. At some brokers, you can fund your investment account even from Paypal, e.g. at eToro.

Are you interested in broker deposits?

Compare broker deposits

Step 4: find the stock you want to buy

After uploading some money into your account, you can start searching for the best stock targets to buy. You can get inspired by other's ideas or you can do your own analysis. Most people listen to others, but if you put some time and energy into your analysis, usually it pays out better and you can learn much more from it. Investment ideas can come from your broker in the form of research or you can use other, independent researches as well. The financial news and investment courses can also be useful to learn how to buy a share that is good.

Step 5: buy the share

You have the account, the cash, and the share target. The last step is to push the buy button. You log in to your online trading platform, search for the share in mind, insert the number of shares you wish to buy, and click buy, which will initiate the purchase of shares. 

When placing an order, you can choose from different order types. The market order buys at the actual market price, while the limit order allows you to specify the exact price at which you want to buy the share. More details on order types here.

Step 6: review your share positions regularly

You are done, your shares are bought. Now it is key to monitor your investments. This basically means following your investment strategy. If you bought the share for holding it for a longer term, you might participate at the annual meeting and collect all the news and information about the company.

For short time buyers, the position management could mean setting up the stop-loss price of where to cut the losses and the target price of where you want to sell the share 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.

Best 5 brokers to buy shares online

As we live in the internet era, trading nowadays takes place through an online platform. Trading floors became well-designed tech platforms with interactive tools and charts.

If you just start to explore how to buy share online, we recommend you to choose between the following five brokers. We tested all five, and we have live accounts with them.

First and foremost, here is a table with an overview of which location you can open an account with each of the brokers:

For online brokers available in your country, check out our broker finder. If fees are on top of your agenda, you will enjoy digging into the ultimate fee comparison table.

Now, let's get to the list of the 5 best brokers where you can buy shares:

Robinhood

60

eToro

14

DEGIRO

15

Saxo Bank

6

Swissquote

11

We hope you were able to choose the best broker for yourself. In the following few paragraphs we have compiled a few good tips on stock trading, what to look and what to look out for. 

What are shares and how do they work?

When you buy a share of a company, you will be an owner i.e. a shareholder of that company in a very small percent.

For example, Tesla has 164 million shares outstanding. When you buy 100 Tesla shares you will be one of the owners of Tesla. Your ownership percentage will be very tiny, 0,000061% (100/164 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. Remaining at the previous Tesla example, let’s assume in 2020 Tesla will pay 100 million USD in dividends, then you will receive 61 USD (0,000061%*100 million).
• The right of voting - if you are a shareholder, you have the right to participate at the 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 buy share online you may find that both the expressions "stock" and "share" are used here. 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 percentage of one company. For example “Yesterday I bought 100 Tesla shares”.

Manage the risk of buying shares

Investments always come with some risks that you should aim to manage (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 in the market and are trying to steal your money. When you are faced with binary option ads and automated investment algorithms that generate outstanding returns, start to get highly suspicious. In these cases, the best thing to do is to immediately turn down 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: spending all of your savings on one or two shares. If the company you have selected goes bust, you lose all your invested money.

How to manage it: diversify your investment portfolio. This practically means buying more different shares and not putting all your eggs in one basket. The ideal number of shares in a portfolio varies somewhere between 20 and 30.

Avoid crappy shares

Risk: when buying individual shares, there is always a risk of selecting the wrong ones. Wrong here could mean defaulting or just buying an overpriced share.

How to manage: 

Learn. This is the tricky part since you need some knowledge and routine. The best is to start learning by reading investment books 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 most recommended investment book by Warren Buffet.

Gather information: While you are learning, start collecting as much information about your target companies as possible. Read news about them, understand their business profiles, start to play with their income statement numbers, get some knowledge about their management background or even attend the annual meeting. These will help you get a better understanding of the company and of the specific industry.

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

Your investment account can be protected

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 is depending on the regulatory body of the broker (learn more about investor protection).

You can compare the protection amount among all reviewed broker.

Compare protection amounts

Tip: use national tax free accounts

In your country of residence, you may open special investment accounts that provide you with favourable tax conditions. For example in the UK, this account is the ISA, the Individual Saving Account, which is exempt from income tax and capital gain tax on the investment returns.

Bottom Line

How to purchase shares online? How can I buy shares? I want to invest in shares online! I want to buy shares! Were these things you were saying 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 share 
6. review your position

It may look tricky for the first time but all you need to do is progress step-by-step. I hope we will see each other at the next Coca-Cola or Berkshire annual meeting.

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

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