What's the Cheapest Way to Research and Buy Stock? (2024)

If you have the right know-how, trading can be a very lucrative and profitable business. But even the most seasoned investor can benefit from saving a few dollars here and there—especially when it comes to fees and commissions.

There is a huge range of service providers investors can use to get investment research and execute trades in a cost-effective and timely manner. Some information providers are free, while others are subscription-based.

Key Takeaways

  • With the surplus of information available online, anyone can research and become more knowledgeable about investing.
  • Start the research process by accessing information from financial news websites, and the online arm of financial firms or investment hubs.
  • Discount online brokers are typically low cost, while the full-service brokers are pricier but often provide more guidance for investors.
  • Direct stock purchase plans (DSPPs) let you buy stock directly from a firm without a broker; they are often a comparatively inexpensive option.
  • If you buy stocks that pay dividends, resist the urge to take them in cash; instead, opt for the company'sdividend reinvestment program (DRIP).

Start With the Basics

Websites such as Investopedia and Yahoo Finance provide investors with a vast array of free stock information such as company financial statements, key earnings ratios, and recent company news. This "raw data,"however, is only useful if the investor is knowledgeable in what the information is conveying. For example, knowing a company's P/E ratio is only useful if the investor understands the ratio's underlying concept.

There are many variables to weigh when considering stock buys and the decision-making process can be complex. Due to the sheer volume and complexity of this raw data, subscription-based advisory andanalyst services can be extremely useful because they help disseminate and analyze raw data for investors. These types of services provide market analysis as well as potential stock picks based on their analyses of a wide range of companies and industries.

Educated Stock Executions

The most inexpensive way to purchase company shares is through a discount broker. A discount broker provides little financial advice, while the more expensive full-service broker provides comprehensive services like advice on stock selections and financial planning. If you use some of the free information sources or subscription-based analysis services in combination with the discount broker, it is possible to keep costs relatively low.

The more you educate yourself about the financial world, the less you will have to rely on investment advisors or full-service brokers. The more comfortable investors are with the stock market, the greater the benefit from going with a discount broker or online broker such as Charles Schwab and E*Trade, where fees $0 per trade for stocks and ETFs and $0.65 for options. That's compared to full-service brokers where fees can subtract thousands from potential returns. And lower commissions means you'll have more money to invest.

Company Purchase Plans

If you're looking for a cheap and easy way to buy stock, consider direct stock purchase plans (DSPPs). These plans let you buy stock directly from the company without the need for a broker. The best part is that they often come with low fees and your purchases may even come at a discount. This is a great option for novice or first-time investors because the minimum deposit can be as little as $100, depending on the company.

A few things to keep in mind though. When you make a purchase through a DSPP, you sign up for monthly deposits. That means you forfeit any control over the prices at which the trades are made. You may end up getting a lower number of shares if the company's stock is trading higher.

Secondly, you may be required to use the services of a broker if and when you decide to sell your shares. That means you'll have to cough up a commission fee at some point. And if you're looking for diversification, you'll want to enroll in a few different plans.

Whether it's a broker, an app, or anything else, be sure to do your research to see if the investing platform you've picked is right for you.

Reinvest Those Dividends

If you invest in stocks that pay back dividends, make sure you enroll in the company's dividend reinvestment program (DRIP)—no matter how alluring it may be to take them in cash. By taking part in the DRIP, you're putting what you're earning back in to buy more shares. And most plans will either charge you a very small fee—some cost nothing at all. Consider the fact that typical companies pay out dividends four times a year. So reinvesting them at little to no commission is a pretty sweet deal.

Signing up for a brokerage account, an app or direct purchase plan may help, but your best bet is to do your own research: you're in charge of your money, and only you know how much you have to invest, your risk tolerance, and your goals.

New Technology

Since you can do pretty much anything with a smartphone or tablet, why not buy and sell stocks with it, too? There are a variety of apps available that allow traders to do business for free or on the cheap.

Robinhood is an app that gives traders access to stocks and ETFs with no commission, even options. There is also free real-time data and execution of trades is relatively quick. You can also trade on a margin account, but that comes with a floating rate fee partly based on the Federal Funds Target Rate. But since you're getting a pretty no-frills service, you should know you won't get access to the research or other tools a traditional brokerage service provides.

M1 Finance offers an app as well as a desktop platform. It has two different subscription services. The free, standard service comes with a variety of frills including an investment account, two daily trades and the ability to trade fractional shares.

You can also build a custom portfolio with M1 Finance, or you can choose from one of 60 expert portfolios. The other option costs $10 a month month or $95 a year. It comes with the same perks as the standard account with a few extras, like bigger cash back rewards and lower loan rates. The catch to trade twice a day is a $25,000 minimum portfolio balance, to comply with pattern-day trading regulations.

What's the Cheapest Way to Research and Buy Stock? (2024)

FAQs

What's the Cheapest Way to Research and Buy Stock? ›

A discount broker is a cheaper option that provides basic execution services for investors who do their own research and analysis. Today, many online brokers offer commission-free trading along with free tools and screeners, making it easier than ever to trade stocks on your own.

What is the least expensive way to buy stocks? ›

The most inexpensive way to purchase company shares is through a discount broker. A discount broker provides little financial advice, while the more expensive full-service broker provides comprehensive services like advice on stock selections and financial planning.

How do you buy stocks at the lowest price? ›

To invest in low-priced shares, start by researching and creating a list of potential companies that show solid fundamentals and growth potential. For diversified exposure, utilize online brokerage platforms to buy shares directly or invest through mutual funds and ETFs specializing in mid-cap stocks.

How much money do I need to invest to make $1000 a month? ›

A stock portfolio focused on dividends can generate $1,000 per month or more in perpetual passive income, Mircea Iosif wrote on Medium. “For example, at a 4% dividend yield, you would need a portfolio worth $300,000.

How much money do I need to invest to make $3,000 a month? ›

Imagine you wish to amass $3000 monthly from your investments, amounting to $36,000 annually. If you park your funds in a savings account offering a 2% annual interest rate, you'd need to inject roughly $1.8 million into the account.

What is the best day of the week to buy stocks? ›

Timing the stock market is difficult, but understanding when to trade stocks can help your portfolio. The best time of day to buy stocks is usually in the morning, shortly after the market opens. Mondays and Fridays tend to be good days to trade stocks, while the middle of the week is less volatile.

What is the best time of day to buy stocks? ›

The opening period (9:30 a.m. to 10:30 a.m. Eastern Time) is often one of the best hours of the day for day trading, offering the biggest moves in the shortest amount of time. A lot of professional day traders stop trading around 11:30 a.m. because that is when volatility and volume tend to taper off.

Can I buy stock with only $100? ›

Only the well-heeled could afford to invest in the stock market. But that's not the case any longer. The democratization of investing means investors with as little as $100 can start building their retirement nest eggs immediately. Online discount brokerages make it easy to buy and sell shares.

How do beginners buy stocks without a broker? ›

Direct Stock Purchase Plans (DSPPs) allow investors to purchase shares of company stock directly from the company itself. Specifically, trades are completed through a transfer agent. That means you could buy stocks without a broker, full-service or online, to complete the transaction.

Which stock broker has the lowest fees? ›

Examples of brokers with Lowest brokerage charges in India include Zerodha, Angel One & Kotak Securities . These platforms often appeal to traders and investors seeking cost-effective options with transparent fee structures, providing a variety of financial instruments at competitive rates.

What is the best way to buy stocks for beginners? ›

One of the easiest ways is to open an online brokerage account and buy stocks or stock funds. If you're not comfortable with that, you can work with a professional to manage your portfolio, often for a reasonable fee. Either way, you can invest in stock online at little cost.

What is the cheapest broker for stock trading? ›

1. Zerodha: Topping our list of the cheapest brokers in India is none other than Zerodha. With its innovative technology and transparent pricing structure, Zerodha has become a favorite among traders and investors alike. From equity to commodities, you can trade it all at incredibly low brokerage rates.

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