Skip to main content

One Click Away

You know why you should save your money, open a bank account and how to find a stock, but one thing is missing: how to open a brokerage account? This is important because it is how you actually buy stocks. Here are three quick and easy steps how to open a brokerage account and place an order to buy a stock. Consult a broker for more information.

Step One: Finding a Broker
A broker is a service. They stand between your stock and you. Depending on the company you are going with as your broker, the minimum opening balance and deposit fee is different. The minimum deposit can range anywhere from $0.00 to $2,500.00. That is one thing to look out for, make sure the minimum amount is an amount you can comfortably hold in your account.

Next, you need to know the fees the broker will charge you. You want to make sure that your broker’s fee is low.  For any investor, but especially a young investor it is important to have a low commission or fee when you buy and sell stocks. For example, if you want to invest $100, but the commission fee that your broker charges are $10. You just lost 10% of your money. Normally, the commission fee range from $5 to $10, the lower the better.  Some examples of commissions, Fidelity and Schwab charge $4.95 and Ameritrade charges $6.95.

Step Two: Signing Up
Opening up an account will require a few things. Here is the average list, it may change depending on the service:
  • Social Security Number or Tax ID Number
  • Your Address
  • Employment Status
  • Drivers Licences
  • Annual Income or Net Worth
  • Date of Birth

Step Three: One Click Away
Now that you have your account, you get to the best part of investing, buying a stock! Most broker’s websites are set up the same way. First you have to find your company that you’re investing in, which is what this book (hopefully) taught you. The website is pretty self explanatory. Walking through it, it should have you fill out the ticker symbol of the company, whether you’re buying or selling, quantity (number of shares) in which you are doing so, and your order type.

Depending on your order type, it changes the conditions of your purchase. This can be a little tricky. Your options are Market Orders, Limit Orders, Stop Orders, Stop-Limit Orders, and Trailing Stop Orders.

WIth most things in investing, the simplest is usually the best. The two simplest are Market Order and Limit Order. A Market Order means that your broker will buy or sell your share(s) at the best possible price during the business day. For most large, well known companies with many millions of shares traded each day Market Orders will be the simplest for the investor. For more information visit Investopedia.

Next is Limit Order. Limit order is best selected when you are aiming for a certain price and the speed at which your shares are purchased or sold does not matter as much. The good part about a Limit Order is that you get to set the maximum price that you are willing to pay, and then you wait to see if your broker was able to fill your order. For more information visit Investopedia.

Next there is the duration list. This tells the broker how long your order will be valid.You have two options here, GTC (Good ‘til Canceled) and GTD (Good ‘til Date). Good ‘til Canceled means the order is open until you cancel it. Good til Date means that the order is open until a specified date in the future.

After you place your order, remember to check the order status to confirm that your trade went through at the price and amount you expected.


Popular posts from this blog

Flocking for Knowledge: A Q&A with Ensemble Capital's Todd Wenning

Ensemble Capital gave me a wonderful chance to speak to a lot of young people about my book and my story. Here is a write up of some of the questions I was asked by Todd Wenning: Todd Wenning: The title of your book is Early Bird: The Power of Investing Young. Why is there such power in investing when you’re young? Maya Peterson:I am sixteen years old. As a young person, I do not pay rent and I cannot drive myself places yet, but I can invest. Investing is one of the first adult choices a young person can make. It is very powerful to make the choice to invest your money rather than spend it right away. Investing is a decision that will impact your future. Also because you’re young, you have a lot of time ahead of you which maximizes the concept of compounding. Compounding is the idea that if you have a small ball of snow at the top of the hill as it rolls down, it will continue to get bigger. In reality, time is the hill and snow is your investments, so an ideal situation is having good…

What a Snowball Really Looks Like

I recently met an 89-year-old woman named Ginny. She has a passion for investing, math and numbers. We talked for three hours and I learned a few critical things. She taught me about successful simple companies, what it was like to be a woman investor in the 1960s, and what time can do for an investor. I hope you enjoy her story as much as I did.
1.Success with Simplicity
Ginny lives in a small town in Minnesota and has been investing for many years. As a wedding gift from her father in law Ginny and her husband received shares of stock. She decided she had better learn about investing, that one gift fired her life long passion in investing. She slowly learned more and more until it became her main interests. Once she got started she never stopped.  
While Ginny and her young family were on a road trip, they stopped for breakfast at a pancake diner.  Time and again on this trip they ran into the same chain. Each diner had one thing in common, they all had overflowing parking lots! After…

Pepsi and the Process

A few months ago, I wrote a post on my investing process called: Why Do I Invest?. In section 4, I talk about connecting the story of a company (recent news, patterns in performance, products, predictable faults, etc.) to the numbers (debt, P/E, ROE, etc.).  I do feel it necessary for me to reiterate the importance of this because of a quote from a recent article.

“I picked Pepsi because I love Sun Chips. Cheddar Sun Chips are my favorite — that’s how I pick most of my stocks.”

Yes, I did buy Pepsi in part because of their products. But I picked it for more than just my growing love of the products, I picked it because a majority of our population buys Pepsi products. It started because I like their products, but it did not end there. I did more research than just open up a bag of chips and fall in love. Just as Aunt Ginny did, I looked at the company and tried their products, along with checking the numbers and learning more than just the calorie count of 12 servings of Cheddar Sun Ch…