There are multiple ways to purchase stock in the market. Learn more about the different ways to buy stock.

Buying stock is possible through a number of avenues, most often through a broker. Brokerage accounts may be opened online or, in some cases, at physical locations. An initial deposit is made into the brokerage account via an ACH transfer, bank wire, or check. Initial deposit requirements vary depending on the broker, but often a minimum initial deposit of $500 to $2,000 is required.

After the account is open and funded with the initial deposit, the investor may select one or more stocks to purchase and instructs the broker to purchase the stock with a buy order.

Buy orders can be entered using an app, the broker’s website, or by calling the broker. To calculate the cost of a purchase, multiply the stock price by the number of shares acquired. For example, 50 shares of a $70 stock would cost $3,500. The broker may or may not charge a commission to execute the trade. A trade confirmation is sent from the broker to the investor and details the trade execution time and price.

After the purchase, the shares are displayed as positions in the brokerage account for the investor to monitor.

Stock Funds

Stock funds invest in equity securities and allow investors to purchase a basket of securities, providing diversification. Stock funds are pooled investments and typically structured as exchange-traded funds (ETFs) or mutual funds. Stock funds may track an index, such as the S&P 500 or a particular sector or industry, such as the financial or real estate sectors.

Stock funds may be actively managed by portfolio managers who make investment decisions in an attempt to outperform a particular benchmark. Stock funds can also be passively managed where a specific index or sector dictates investment weighting.

Stock funds provide diversification benefits because broad exposure to multiple companies or ETFs can be achieved with a single investment.

What is a stock mutual fund?

Mutual funds collect money from multiple investors and combine them to purchase securities such as stocks, ETFs, and bonds. The value of a mutual fund is equivalent to the performance of the underlying assets owned by the fund and tracked similarly to a stock. Investors can buy shares of a mutual fund much like a stock but receive no ownership of the mutual fund. The individual investor does not actively manage the holdings in mutual funds. Instead, one or more money managers oversee the investments and decide how and where to allocate the investors’ money. Unlike stocks and ETFs, mutual funds cannot be traded during regular market hours. 

What is the difference between a stock and a fund?

Stocks are shares of a company-issued to generate capital for the corporation. Investors that purchase stock acquire an ownership stake in the company based on the number of shares they purchase. Shareholders own a portion of the company and have voting rights on corporate issues. Shares of common stock are issued in the primary market through an initial public offering (IPO) and then trade in the secondary market, typically on a stock exchange, through an intermediary known as a brokerage firm.

Stock funds invest in equity securities and allow investors to purchase a basket of securities providing diversification. Stock funds are pooled investments and typically structured as exchange-traded funds (ETFs) or mutual funds. Stock funds may track an index, such as the S&P 500 or a particular sector or industry, such as the financial or real estate sectors. Stock funds may be actively managed by portfolio managers who make investment decisions in an attempt to outperform a particular benchmark.