06 - Stock Basics: Buying Stocks

You've now learned what a stock is and a little bit about the principles behind the stock market, but how do you actually go about buying stocks? Thankfully you don't have to go down into the trading pit yelling and screaming your order. There are two main ways to purchase stock:

Using a Brokerage
The most common method to buy stocks is to use a brokerage. Brokerages come in two different flavors. Full-service brokerages offer you (supposedly) expert advice and can manage your account but also charge a lot. Discount brokerages offer little in the way of personal attention but are much cheaper.

It used to be that only the wealthy could afford a broker, full service brokers aren't cheap! With the Internet came the explosion of online discount brokers. Because of them nearly anybody can now afford to invest in the market.

We've actually got a whole other tutorial on brokers and online trading. Rather than repeating the info, check it out here.

DRIPs & DIPs
Dividend Reinvestment Plans (DRIPs) and Direct Investment Plans (DIPs) are are plans in which individual companies allow shareholders to purchase stock directly from the company for a minimal cost. Drips are a great way to invest small amounts of money at regular intervals.