How to invest in stocks online with a Vanguard Brokerage Account
In today's digital world, you can buy stocks online in just a few easy steps. Let's go through the process of starting your online stock trading journey.
Step 1: Set your investment goals
Before you consider what stocks to invest in, it's important to determine your investing goals. Your goals can include saving for retirement, paying for college, or even saving for a family vacation. Setting your financial goals can help determine your risk tolerance, time horizon, and other variables that may play a role in what stocks you choose to invest in and your long-term investing strategy.
Step 2: Choose the right account type based on your investing goals
General investment account. An account that allows you to buy and sell stocks, mutual funds, ETFs, and other investments. General investment accounts are easy to use, have no contribution limits, and have limited restrictions on investment options. Keep in mind, you must pay taxes on any profits or income generated from your account.
Traditional retirement account. A tax-advantaged account funded with pre-tax dollars that allows you to invest in securities and save for the future. Traditional retirement accounts offer tax-deferred growth on your investments, and you're required to pay taxes on your contributions and earnings when making withdrawals in retirement. You also may be charged a penalty if you withdraw before retirement. Annual contribution limits to traditional retirement accounts are set by the IRS each year. Common retirement accounts include individual retirement accounts (IRAs) and employer-sponsored 401(k) plans.
Learn more about IRAs
Roth retirement account. A Roth account allows you to contribute after-tax earnings for your future retirement. It offers tax-free growth and potentially tax-free withdrawals once you reach retirement age.3 You can also withdraw your Roth contributions at any time with no penalties. Roth contribution limits are determined by your modified adjusted gross income (MAGI), and high-income earners cannot make contributions. Common Roth retirement accounts include Roth IRAs and employer-sponsored Roth 401(k)plans.
Learn more about Roth IRAs
Step 3: Open a brokerage account online in just 10 minutes
Opening a new Vanguard Brokerage Account is easy and should only take 5–10 minutes depending on the account type.
To get started:
- Select Open an account on Vanguard's Personal Investor homepage.
- Log in to your Vanguard account, or create a new account.
- Choose how you'll fund your account (bank deposit, rollover, transfer, etc.).
If you're creating a new Vanguard account, you'll need to provide personal information like your Social Security number, bank account, and employment details. Once you've entered your personal information, you're just about ready to start investing.
Learn more about brokerage accounts
Step 4: Fund your new account's settlement fund
Your new brokerage account comes with a settlement fund. Your settlement fund acts as a container for your cash, so that when you buy or sell a security, the money flows to and from your settlement fund. Any funds deposited to your account, proceeds from sales, and non-reinvested dividends are all held in your settlement fund.
Setting up your settlement fund is flexible. You can make an initial deposit when you open your account, add funds whenever you choose, or set up automatic recurring transfers to make regular deposits into your brokerage account.
Step 5: Research and select stocks to invest in
By analyzing a company's financial health, business model, and industry competitors, you can make more confident investment decisions for your portfolio. Vanguard has several research tools to help you make more informed decisions when investing in stocks on your own:
- Stock screeners. Choose from 5 screeners with 40-plus criteria to find a stock to invest in.
- Mutual fund and ETF screener. Narrow your mutual fund and ETF search using criteria that match your preferences.
- Historical Ex-Dividend Date Tool. Find the past dividends of a stock, ETF, or mutual fund before you invest. Remember, past investment performance does not guarantee future results.
- Insights and research. Get market commentary, investment research, and quarterly fund reviews.
Research & buy stocks
Track securities with a watchlist
Step 6: Begin investing in stocks
Once you have an investment account and have identified a stock to invest in, you'll need to choose how to execute your trade. Two of the most common order types are market orders and limit orders. A market order allows you to buy or sell a stock at the best price available in the market at the time of order entry. A limit order prespecifies the price at which you're willing to buy or sell a stock and can help protect you from adverse market movements.
Once executed, stock trades will settle in your account the next business day. Learn more about order execution
Learn more about order execution