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How do you invest in the stock market?

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Investing in the stock market involves either paying a full-service or discount broker, depending on the amount of money a person wants to invest. While discount brokers work with as little as $1,000, full-service brokerages require much higher account minimums.

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How do you invest in the stock market?
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Full Answer

Discount brokers charge significantly lower fees than full-service brokers, but do not offer the same level of custom advice. In fact, clients who use discount brokers are completely in charge of their own investment choices. Regardless of whether a person invests through a discount or full-service brokerage, there are commissions involved. These commissions sometimes result in large deductions from any profits earned for the client.

Other options for investing in the stock market include purchasing shares straight from a business through what are known as direct stock purchase plans, some of which require a minimum investment, or online trading. Online trading websites charge variable fees, some significantly higher than others, for particular types of trades.

Another way to invest in the stock market is to purchase mutual funds and bonds through brokerage firms or, in the case of mutual funds, from banks. The federal government sells its own bonds through TreasuryDirect. The minimum purchase for government bonds ranges from $100 to $1,000.

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