How to Invest in Stocks

How to Buy Stocks

Updated for Jan 6, 2020
Investing in stocks is surprisingly easy, and it’s one of the only ways to potentially turn a small amount of money into a larger amount of money.

To put the power of investing in perspective, had you opened up a brokerage account and invested $10,000 in the US stock market in 2010, you’d have over $27,210 today!

3 Easy Steps to Buy Stocks Now

  1. Open a free online brokerage account with Ally Invest (the best stock broker of 2019 with some of the lowest fees)
  2. Get started with the 4 popular stocks below for free and sign up for Motley Fool Stock Advisor to find the best stocks to invest in
  3. Place a “limit” order to buy your shares; this is the price that a stock is purchased for
  4. Reap the endless rewards of being a stock market investor!
BUY STOCKSopen an account on Ally Invest’s secure Site

Why Buy Stocks?

Investing in stocks is one of the ways the rich keep getting richer (it’s also a lot easier to invest in stocks than you might think). Regardless of the amount of cash you have saved, if you’re not putting your cash to work by investing it, history proves you will miss out over time.

Investing in stocks is how the rich keep getting richer. Long-term capital gains rates for investment income are often as low as 15%. Taxes for wages and salaries can go as high as 40%.

To put it simply, investing in stocks offers a way to earn income without working. This concept sounds strange at first, but when you think about it, money is a tool. At a certain point, when you accumulate enough money, you no longer have to trade your time for money. You can trade your money for more money.

This is the “secret” to building serious wealth. Just ask Warren Buffett, a man who has made $89 billion from investing his money over the course of his life. If you have a long-term time horizon, and aren’t worried about short-term price fluctuations, investing enables you to grow your assets…sometimes exponentially. For example, if you buy $10,000 worth of Starbucks stock, and Starbucks moves 30% higher, you’ll make $3,000 by doing nothing. Of course, you can lose money investing, too. But there’s no reward without some risk.

Step #1: Opening an Account

The first thing you’ll have to do before you can invest in stocks is open an online brokerage account.

The best online broker that we have found is Ally Invest, not only because Ally is offering free trades for 90 days, but also because Ally’s normal commissions are among the lowest in the industry.

All stock and ETF trades start at just $3.95. Every Ally client gets access to robust trading platforms and 24/7 customer service, and Ally never charges any inactivity or maintenance fees.

This means it’s totally free to open an account with Ally Invest. Many consumer banks in the US charge customers monthly fees just to maintain an account. The fact that it’s totally free at Ally is pretty awesome.

Step #2: Finding Winning Stocks to Invest In

After your Ally Invest account is open and funded, the next step is to sign up for Motley Fool Stock Advisor. Remember, the goal of investing is to make money. Motley Fool is a professional stock market investor education group that helps other traders find winning stocks to invest in. Their program has generated positive returns* in each of the past 5 years. They have been successfully issuing alerts for over 25 years.

Simply put, Motley Fool Stock Advisor help take the uncertainty out of investing.

Although you certainly don’t have to sign up for Motley Fool Stock Advisor to start investing in stocks, investing without signing up is like throwing darts with your eyes closes and hoping to hit a bullseye.

Nonetheless, once your Ally Invest account is opened and funded, and you’re ready to trade, consider starting with these 4 stocks below, which are some of the most popular stocks in 2019.

Ticker Symbol Popular Because
AMZN Amazon is the fastest growing online retailer in the entire world, and is an extremely hot stock
SNAP Up 101.7% year-to-date, exciting recent growth and potential increased monetization opportunities
GRPN Very popular online booking and discount coupon service with bullish analysts ratings
SPY ETF that tracks the S&P 500 Index (this is what most people refer to as “the stock market”)

Step #3: Making the Trades

Once you’ve entered the name of the stock that you want to buy into Ally’s platform, real-time prices and buttons to buy and sell the stock will appear.

Buying MJ Ally Invest
What an Ally Invest account looks like

After you’ve selected a stock to invest in (like Snapchat, for example), you need to decide how many shares you want to purchase. This will be your fractional ownership in the company. The exact number of shares to purchase is entirely up to you. You can buy 1 share or 1,000,000 shares. You’re only limited by the funds you have available. Ally’s system, thankfully, won’t let you accidentally purchase too many shares relative to your account value. As a general rule of thumb, most investors never put more than 10% of their available funds into a single stock. So if you have $1,000 and a stock is $50 per share, you might want to only buy a few shares.

When it comes to placing orders, experts prefer to use “limit” orders, because you get to decide what price you want to buy or sell at. A “market” order will execute your order at the current market price. This is sort of like buying a house without looking at the offering price; for stocks, market orders are only useful if you don’t care about the short-term price movements and just want to own the stock. After submitting your order, you’ll receive a confirmation of your investment and you’ll officially be an investor! Exciting!

If you want to sell your investment and close out your position, all you have to do is click on your position in your Ally Invest account and click “sell”. Of course, if you need help with anything in this process, Ally Invest customer service is ready to help you 24/7 over the phone or live chat.

About Opening a Brokerage Account

Opening an Account

It takes about 5 minutes to open an account with Ally Invest. There is no fee to open or maintain.

Verifying Yourself

You’ll probably have to answer some questions about your current income and employment status.

What You’ll Need

US licensed stock brokers are required to have each client’s Social Security Number for tax purposes.

Final Thoughts

In the world of finance, investing is always considered somewhat risky, but it’s also highly lucrative. As the old saying goes, “fortunes favor the bold.”

Simply put, Ally Invest is one of the best and cheapest brokers to invest with in 2019, and step #1 to investing is to create a free self-directed brokerage account. Step #2 is to sign up for Motley Fool Stock Advisor, which will help you find the best stocks to invest in.

At the end of the day, buying stocks and investing is planning for your financial future. Regardless of the amount of cash you have in your bank account, if it’s just sitting there, it’s not doing anything for you. Instead of trading their time for money, financially savvy people trade their money for more money. Think about it!

BUY STOCKSopen an account on Ally Invest’s secure Site
$4.95 per trade
24/7 Customer Service
$0 Annual Fees

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Collectively, we’ve spent thousands of hours examining the most popular financial products and tools. Bottom line, we simplify and explain the myriad of consumer financial options available today, so you can make decisions with ease.

Updated: Jan 1, 2020