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Investment types

How to invest in stocks online

Learn how to invest in stocks online with Vanguard. Explore stock investing strategies to grow your portfolio and start your investment journey today.
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Investment types
Stocks
Online trading
Brokerage accounts
ETFs
Education
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What is stock investing?

Stock investing represents the purchase of ownership shares in publicly traded companies with the goal of generating financial returns. When you purchase shares of stock, you acquire a small piece of ownership in a corporation. This ownership can give you specific rights, including votes on corporate governance matters (like board member elections), and may entitle you to a portion of the company's profits through dividend distributions.
 

How does investing in stocks work?

With a Vanguard Brokerage Account, you can invest in stocks that are listed on major exchanges like the New York Stock Exchange (NYSE) and Nasdaq. Stock prices fluctuate in response to multiple factors, including company performance, investor sentiment, and economic conditions. As a shareholder, when a stock's price rises, the value of your investment increases; when it falls, the value of your investment declines. Companies may pay a portion of their profits to stockholders in the form of dividends. Dividends are paid on a per-share basis and may be paid out in cash or additional stock shares.
 

Benefits of investing in stocks

Investing in stocks is one way to grow your wealth over time, offering many benefits to your portfolio:

  • Dividend income. Company profits paid out to you as a shareholder.
  • Capital appreciation. When a stock price rises, increasing the value of your shares.
  • Tax efficiency. If you hold a stock for more than one year, you're subject to long-term capital gains taxes, which are typically lower than ordinary income taxes.
  • Portfolio diversification. Stocks are an essential piece of a well-diversified portfolio that can help potentially outpace inflation and grow your wealth.
  • Liquidity. Stocks can be traded throughout the day and can easily be sold for cash.

Learn more about stocks
 

Common types of stocks to invest in

You have the option to invest in 2 types of stock: common stock or preferred stock. Common stock is a security that represents ownership in a corporation, while preferred stock is a hybrid security that combines the features of stocks and bonds. Each type of stock has its own attributes.

  Common stock Preferred stock
Voting rights  Full voting rights.  Typically, no voting rights.
Dividends Not guaranteed and variable. Predetermined and fixed.
Dividend preference After preferred stock shareholders. Before common stock shareholders.
Price volatility Can be high. Usually more stable.
Liquidation priority After bondholders and preferred shareholders. After bondholders and before common shareholders.

Stocks also can be categorized by their industry, size, and geography.

Industry Size Geography
  • Health care.
  • Micro-cap.
  • Domestic market (U.S.).
  • Energy.
  • Small-cap.
  • International developed markets (Western Europe, Asia Pacific, etc.).
  • Technology.
  • Mid-cap.
  • Emerging markets (Brazil, Russia, India, etc.).
  • Financials.
  • Large-cap.
  
  • Utilities.
    
  • Defense.
    
  • Consumer goods.
    

Choosing the right online investment platform

Building your stock portfolio starts with choosing the right platform. Your investment platform facilitates stock transactions, provides real-time market data, offers investment insights and analysis, and helps you track your portfolio all in one place.

Vanguard Brokerage's user-friendly online investment platform provides you with access to thousands of stocks, ETFs (exchange-traded funds), mutual funds, and other securities. Vanguard offers $0 commission for online ETF and stock trades, 1and our low-cost ETFs and mutual funds are 84%2 less expensive than the industry average. Also, because Vanguard Brokerage doesn't receive payments for directing your trades and instead prioritizes the best execution price on your transactions, you can keep more of your returns.

Already have a brokerage account?

You can start investing now.

Buy & sell stocks & ETFs

See an example of how to place a trade

Simplify your portfolio management by transferring your investments from other companies to Vanguard.

Consolidate with an account transfer

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:

  1. Select Open an account on Vanguard's Personal Investor homepage.
  2. Log in to your Vanguard account, or create a new account.
  3. 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

Find a stock

Use the search bar below to find information about a stock or ETF that interests you. With our search feature, you can enter the name or symbol of any publicly traded stock or ETF to view more information about that potential investment.

Find a stock or ETF

Tips for successful stock trading

Diversify your stock portfolio

Diversification is a time-tested strategy to help manage investment risk. For example, investing heavily in a single sector could leave your portfolio vulnerable if that industry faces unexpected challenges. Instead of concentrating your investments in a single area, you can diversify your portfolio across different sectors, geographies, and company sizes to help weather market fluctuations.

  • Sector. Invest across industries like technology, health care, financial services, and energy. Because each sector responds differently in various economic circumstances, exposure across sectors can help maintain portfolio stability.
  • Market cap. Invest across large-cap, mid-cap, and small-cap companies. This helps balance investments in smaller, higher-risk companies with those in larger, more stable companies.
  • Geography. Invest across the domestic market (U.S.), developed markets (Europe, Japan, etc.), and emerging markets (India, Brazil, etc.). Global or regional ETFs can help with geographic diversification.

If individual stock picking feels overwhelming, you can still diversify your portfolio through ETFs or mutual funds that invest in a variety of stocks across industries, geographies, or other themes. These investments provide portfolio exposure to many stocks in a single security.

  • ETFs. Operate like stocks and trade throughout the day at market prices. ETFs have no minimum investment requirement, and often focus on specific themes or investment strategies. For example, Vanguard Total Stock Market ETF (VTI) offers you exposure to the entire U.S. equity market, including small-, mid-, and large-cap growth and value stocks.

    Learn more about ETFs
  • Mutual funds. Pool money from investors to create diversified portfolios of securities and short-term debt. Mutual funds can be passively or actively managed, and trade once per day. There are more than 260 Vanguard mutual funds, some of which have a minimum investment as low as $1,000.With a Vanguard Brokerage Account, you can purchase Vanguard mutual funds and explore our lineup of non-Vanguard mutual funds.

    Learn more about mutual funds

Monitor your investments regularly

Purchasing shares of a stock is just the beginning of your investing journey. You'll want to actively monitor your portfolio's health and performance using key metrics, which can help you make informed decisions:

  • Asset allocation. The distribution of stocks, bonds, cash, and other assets in your portfolio.
  • Sector exposure. The percentage of your portfolio invested in different industries.
  • Total return. Your capital gains or losses combined with dividend income.
  • Portfolio income. Annual dividend yield and interest income generated by your portfolio annually.

It's also important to periodically check your investments to ensure they still align with your chosen asset allocation. If they've drifted, you may want to consider rebalancing. While you can monitor your portfolio and rebalance on your own, Vanguard offers a variety of advice services that provide personalized support to track your progress and help you succeed.

Explore Vanguard advice services
 

Long-term vs. short-term stock investing strategies

Choosing between long-term and short-term investing depends largely on your financial goals and risk tolerance.

Long-term investing ranges from several years to decades, making it best suited for major life goals like paying for retirement and education. Using an extended time frame allows you to harness the power of compound growth and can also offer tax advantages.

Short-term investing can span from minutes to a year and may help you reach financial goals more quickly. This approach adds more risk, requires investing expertise, and can incur more capital gains taxes.

While we believe that a diversified, long-term investment strategy aligned with your needs is a more appropriate approach for your portfolio, short-term investing can be a useful tool for you to address your immediate goals.

Reach your short-term investment goals
 

Implementing proven stock investing strategies

Not all investors pick stocks based on the same criteria. Many investors choose a philosophy which aligns with their goals and where they see opportunity in the market. Here are a few approaches investors often use to select their investments:

  • Value investing. Finding undervalued stocks that currently trade below their intrinsic value based on fundamentals like cash flow, earnings, and assets.
  • Growth investing. Investing in companies that are poised to grow at a faster rate than their competitors.
  • Dividend investing. Selecting stocks that pay regular dividends for steady cash flow.
  • Index fund investing. Diversifying into a fund that tracks an industry or market benchmark.

Additionally, implementing smart investment strategies like diversification, rebalancing, and minimizing fees may help you achieve long-term success.   

Vanguard's principles for investing success

Common questions about investing in stocks

Stock prices can fluctuate due to various factors, including poor company performance, economic changes, or geopolitical uncertainty. Any of these factors could lead to a potential loss of the money you invest. Mutual funds and ETFs can help diversify your portfolio and mitigate the risks of investing in an individual stock.

U.S. citizens, permanent residents, and military personnel stationed outside of the country are all eligible to open a Vanguard account and buy shares in Vanguard funds.

Yes, you'll have to pay taxes on your stock investment earnings. Your tax exposure will depend on your account type (brokerage account, IRA, etc.), investment (stock, mutual fund, ETF), and how long your investment was held before the time of sale. You'll also pay taxes on any dividends earned over the course of holding your stock shares in a general investing account.

Learn more about paying taxes on your investment income

When you buy stocks online, you may be charged a commission for placing a trade or other account fees depending on the type of brokerage service you're using. Vanguard Brokerage doesn't charge commissions when you trade stocks, Vanguard and non-Vanguard ETFs, or Vanguard mutual funds online. Before opening an investment account, it's important to fully understand your broker's fee structure.

See the Vanguard Brokerage Services commission & fee schedules

Some brokerages allow you to buy and sell stocks outside of regular trading hours for more flexibility. At Vanguard Brokerage, you can place limit stock orders in an extended-hour session between 4 p.m. and 5:30 p.m., Eastern time.

Have stocks somewhere else?

Managing multiple portfolio accounts can create unnecessary complexity and make it difficult to track your investments. By consolidating your investments into a single platform, you can better track your portfolio's performance and update your investment strategy as needed.

Vanguard Brokerage offers a comprehensive investment platform, making it easy to consolidate your investments from other accounts and invest in stocks. With a Vanguard Brokerage Account, you get access to:

  • Commission-free trades online.1
  • No minimum initial investment.
  • No minimum investment for settlement funds.
  • High-quality research tools.
  • An expert Client Services team.

Keep in mind that when moving your investment accounts to Vanguard Brokerage, you may be charged an outgoing transfer fee by your previous broker.

Start your account transfer today and consolidate your investments with Vanguard

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1Commission-free trading applies to stock, Vanguard and non-Vanguard ETF, and Vanguard mutual fund trades placed online; most clients will pay a commission to buy or sell by phone. Vanguard Brokerage reserves the right to change the non-Vanguard ETFs included in these offers at any time. All ETFs and mutual funds are subject to management fees and expenses; refer to the applicable prospectus for more information. Account service fees may also apply. All ETF sales are subject to a securities transaction fee. See the Vanguard Brokerage Services commission and fee schedules for full details.

2Vanguard average ETF and mutual fund expense ratio: 0.07%. Industry average ETF and mutual fund expense ratio: 0.44%. All averages are asset-weighted. Industry average excludes Vanguard. Sources: Vanguard and Morningstar, Inc., as of December 31, 2024.

3Withdrawals from a Roth IRA are tax free if you are over age 59½ and have held the account for at least five years; withdrawals taken prior to age 59½ or five years may be subject to ordinary income tax or a 10% federal penalty tax, or both. (A separate five-year period applies for each conversion and begins on the first day of the year in which the conversion contribution is made.)
 

For more information about Vanguard funds or Vanguard ETFs, visit vanguard.com to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information are contained in the prospectus; read and consider it carefully before investing.

You must buy and sell Vanguard ETF Shares through Vanguard Brokerage Services (we offer them commission-free online) or through another broker (who may charge commissions). See the Vanguard Brokerage Services Commission and Fee Schedules for limits. Vanguard ETF Shares are not redeemable directly with the issuing Fund other than in very large aggregations worth millions of dollars. ETFs are subject to market volatility. When buying or selling an ETF, you will pay or receive the current market price, which may be more or less than net asset value.

All investing is subject to risk, including the possible loss of the money you invest. Diversification does not ensure a profit or protect against a loss.

Funds that concentrate on a relatively narrow market sector face the risk of higher share-price volatility.

Be aware that fluctuations in the financial markets and other factors may cause declines in the value of your account. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income.

Vanguard's advice services are provided by Vanguard Advisers, Inc. ("VAI"), a registered investment advisor, or by Vanguard National Trust Company ("VNTC"), a federally chartered, limited-purpose trust company.

The services provided to clients will vary based upon the service selected, including management, fees, eligibility, and access to an advisor. Find VAI's Form CRS and each program's advisory brochure here for an overview.

VAI and VNTC are subsidiaries of The Vanguard Group, Inc., and affiliates of Vanguard Marketing Corporation. Neither VAI, VNTC, nor its affiliates guarantee profits or protection from losses.