A Beginner's Guide to Buying Stock

Do you want to get started with stock investing to build your wealth? Here's what you need to do.

By Matthew Frankel, CFP – Updated Oct 14, 2025 at 3:34 PM | Fact-checked by Frank Bass

Key Points

Open a brokerage account to start buying stocks.
Decide on stocks to buy and plan to hold them long term.
Place your order using market or limit orders, depending on your strategy.

So, you've decided to invest in the stock market. You even have some ideas about which stocks you want to buy. But how do you actually buy shares of your favorite companies?

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Stock

A stock represents an ownership interest in a business. When a business wants to raise money, its board of directors determines the number of shares to issue.

In this article, we'll discuss the basics of how to buy your first stocks in an easy-to-understand way. Follow these simple steps, and you'll be ready to start building a stock portfolio of your own.

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An infographic detailing how to buy stock in six steps. — Image source: The Motley Fool.

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One very important thing to know is that brokers typically publish a fee schedule that breaks down all the potential costs of being their customer. It should be fairly easy to find by searching for "[broker name] fee schedule."

Once you've chosen a brokerage, you must complete a new investment account application. This process is typically quick, but you'll need to have certain information handy, such as a driver's license and Social Security number.

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Social Security Number (SSN)

A nine-digit identification number issued to United States citizens, permanent residents, and temporary residents originally meant to be used exclusively to track earnings and benefits.

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Types of stock-purchasing orders.
Order Type	What It Is	When to Use It
Market order	Instructs the broker to immediately buy the stock at the best available price	For most buy-and-hold investments, especially stocks with high trading volumes
Limit order	Instructs the broker to execute the order only if a stock is trading at or below a certain price	If you want to wait for a pullback to buy a stock, or the stock is thinly traded
Stop-loss order	Instructs the broker to execute the order if a stock reaches a certain price	If you have a specific exit point in mind for a stock investment, either to the upside or downside

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What Is a Stock Market Index?

What are the major stock market indexes, and what stocks do they contain?

Stock Exchanges: Where Shares Are Bought & Sold

The markets where people buy and sell stock come in several different flavors.

What Are the 11 Stock Market Sectors?

The larger stock market is made up of multiple sectors you may want to invest in.

Stock Market Basics for Beginners

If you're just getting started investing, these basics can help guide you.

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About the Author

Matt Frankel, CFP, is a contributing Motley Fool stock market analyst and personal finance expert covering financial stocks, REITs, SPACs, and personal finance. Prior to The Motley Fool, Matt taught high school and college mathematics. He holds a bachelor’s degree in physics from the University of South Carolina, a master’s degree in mathematics from Nova Southeastern University, and a graduate certificate in financial planning from Florida State University. He won a SABEW award for coverage of the 2017 Tax Cuts and Jobs Act. He is also regularly interviewed by Cheddar, The National Desk, and other TV networks and publications for his financial, stock market, and investing expertise.

TMFMattFrankel

@MattFrankelCFP

Matt Frankel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Key risks of investing in stocks

Let's be perfectly clear. Regardless of how safe a stock may seem or how well its business is doing, when you invest in stocks, there is a chance you will lose money. Period. There are too many things that could cause any or all of your stocks to go down than I can reasonably list here, but just to name a few:

Economic weakness or recession

Competitors taking market share

Rising or falling interest rates (depending on the nature of the business)

Political headwinds, such as legislation that negatively affects an industry

Inflation

Geopolitical tensions, including wars and trade tensions

Negative company news, which can take many forms (e.g., key executives leaving, lawsuits, or weaker-than-expected earnings guidance)

Common types of stocks to invest in

There are far too many categories and subcategories of stocks to discuss all of them here, but here are some of the common categories:

Growth stocks: Companies that are growing sales (or are expected to) faster than their peers or the overall stock market average.

Value stocks: Companies whose stocks are trading for a discount to the intrinsic value of the business.

Dividend stocks: Stocks that distribute some of the company's profits to investors in the form of dividends.

Blue chip stocks: Stocks of long-established businesses with consistent profitability and financial strength.

Large-cap stocks: A term used to refer to the largest companies in the stock market. The traditional definition is those with a $10 billion market capitalization or higher.

Mid-cap stocks: Traditionally defined as a company with a market cap ranging from $2 billion to $10 billion.

Small-cap stocks: Stocks of smaller companies, usually defined as less than $2 billion in market cap.

Again, this is not an exhaustive list of stock categories. And it's worth noting that stocks can (and usually do) fit into more than one of these categories. For example, you can have a large-cap stock that's also a dividend stock.

Tax implications of buying stocks

Before you get started with buying stocks, it's important to understand the potential tax implications. If you invest through a retirement account (like an IRA), there aren't any ongoing tax implications, although you may have to pay taxes on eventual withdrawals. With a standard brokerage account, however, there are two main types of tax implications to keep in mind:

Dividend taxes: The dividends paid by stocks you own are a form of taxable income. Most dividends get preferential tax treatment (qualified dividends) but could still add a significant sum to your tax bill.

Capital gains: If you sell stocks for more than you paid, the profit can be taxable. This is known as a capital gain, and the tax rate depends on your income level and how long you owned the stock.

3. Decide how many shares to buy

To determine how many shares you should buy, first decide how much money you want to invest in each stock that interests you and then divide this amount by the stock's current share price. You can find stock prices on your brokerage's platform by searching for either the stock's ticker symbol or the company's name.

Some brokerages allow you to buy or sell fractional shares. This is especially common with app-focused brokers.

For example, let's say you want to invest $800 in Microsoft (MSFT +0.56%). You use Microsoft's stock ticker symbol (MSFT) to check its share price and find that it is about $525 (as of October 2025). Dividing $800 by this share price indicates you can buy as many as 1.52 shares.

If your broker doesn't trade fractional shares, you would purchase one share of Microsoft stock and have $275 left over. With fractional shares, you can invest your entire $800.

4. Choose an order type

Different order types exist for stock purchases. For our purposes, there are two types of orders you should know about.

A market order, which instructs your broker to buy the stock immediately and at the best available price, is typically the best order type for buy-and-hold investors.

On the other hand, you may want to place a limit order, which indicates to your broker the maximum price you're willing to pay for a stock.

For example, let's say a stock is currently trading for $20.50 per share. You want to buy it only when the price is less than $20, so you place a limit order. Your broker then buys shares on your behalf only if the stock's price dips below $20.

A Beginner's Guide to Buying Stock

Do you want to get started with stock investing to build your wealth? Here's what you need to do.

Key Points

Stock

Social Security Number (SSN)

What Is a Stock Market Index?

Stock Exchanges: Where Shares Are Bought & Sold

What Are the 11 Stock Market Sectors?

Stock Market Basics for Beginners

About the Author

Our Guides

Premium Investing Services

Can I buy stocks on my own without a broker?

How should a beginner invest in stocks?

Can I buy stocks with $100?

How much should I invest?

How much should a beginner invest in stocks?

How do you actually buy shares of stock?

1. Open a brokerage account

What does the brokerage offer?

Is the brokerage platform user-friendly?

5. Place the stock order with your brokerage

6. Build your portfolio

Why buy stocks?

Key risks of investing in stocks

Common types of stocks to invest in

Tax implications of buying stocks

Related investing topics

Is now a good time to buy stocks?

FAQ

2. Decide which stocks you want to buy

Follow a buy-and-hold strategy

Diversify your holdings

3. Decide how many shares to buy

4. Choose an order type