Stocks Basics: How to Purchase Stocks

Now that you are more familiar with the principals behind the stock market, it is time to learn how one actually goes about buying stocks? Luckily for you, you won’t have to venture onto the floor and start flailing your arms about wildly while you scream your order. Here are the two main ways in which you would purchase stock:

1. Purchase Stock via a Brokerage

Most stocks are purchased through a brokerage. There are two different types of brokerages. If you want to opt for (supposed) “expert advice” as well as someone to manage your account, you can sign with a full-service brokerage. However, this can be quite costly. Discount brokerages are not as personal or attentive, but they are much cheaper, however.

Years ago, only wealthy people could afford to hire as only brokerage firms at that time were extremely costly. However, with the internet there was a burst in discount online brokers. So now, thankfully, anyone who has an interest in the market can now afford to invest.

2. Purchase stock via DIPs and DRIPs

If you wish to purchase stock directly from a company, for a minimal cost, you would opt for either a Dividend Reinvestment Plan (DRIPs) or a Direct Investment Plan (DIPs) if you are interested in investing small amounts of money o n a regular basis; DRIPS are an excellent way to invest.