can anybody buy stocks? A clear guide

Can Anybody Buy Stocks?

Can anybody buy stocks? Yes — in most markets nearly anyone with legal capacity and a brokerage account can buy publicly traded stocks. This article explains what "buying stocks" means, the practical and legal requirements, who may be restricted, and step-by-step guidance for beginners. By the end you will understand account types, verification, order types, tax and cost basics, and where to get trustworthy help — plus how Bitget products fit into a Web3-aware approach.

Overview

What is a stock? A stock (or share) represents partial ownership in a company. Owning stock gives shareholders economic rights — such as dividends and capital gains potential — and sometimes voting rights, depending on the share class.

Stocks trade on public markets through two main venues:

• Primary market: when a company issues stock for the first time (IPO) or in a secondary offering, shares are sold to investors directly by the company or underwriters.
• Secondary market: after issuance, shares trade between investors on exchanges or alternative trading systems.

Trades are executed by broker-dealers on exchanges or internal platforms. Brokers act as intermediaries, handling order routing, settlement, custody, and regulatory reporting. Today, retail access is broad: low-cost brokers, mobile apps, and some trading platforms let individuals participate with small amounts of money.

As of 2024-06-01, according to publicly available regulator and exchange reports, U.S. equity markets reported total market capitalizations measured in the tens of trillions of dollars and average daily trading volumes that commonly reach tens to hundreds of billions of dollars, illustrating the scale and liquidity available to investors.

Basic Requirements to Buy Stocks

Brokerage Account

To buy stocks you normally open a brokerage account with a regulated broker-dealer or an authorised financial intermediary. Brokers come in several forms:

• Online discount brokers: low commissions, modern mobile/desktop platforms, self-directed trading and research tools.
• Full-service brokers: personalised advice, wealth management, and premium services for higher fees.
• Bank brokerage arms: integrated with banking services, often convenient for funding.

Common platform features include market data, order entry (market, limit, stop), research and screening tools, account dashboards, tax reporting, and mobile apps. When choosing a broker you should check licensing, capital protections, and local regulatory supervision.

Identification and KYC (Know Your Customer)

Regulated brokers perform KYC and anti-money-laundering (AML) checks before enabling trading. Typical requirements include:

• Government-issued photo ID (passport, driver’s license).
• Proof of address (utility bill, bank statement).
• National tax identifier (e.g., U.S. Social Security Number).
• Date of birth and contact details.

KYC also includes checks against sanctions lists and politically exposed person (PEP) screening. Expect identity verification to be required before deposits or trades are allowed.

Age and Legal Capacity

Minimum age to open a standard brokerage account is usually the age of legal majority in your jurisdiction (commonly 18). Minors cannot hold standard accounts in their own name; custodial accounts (UGMA/UTMA in the U.S. or local equivalents) allow an adult to manage assets for a child until the child reaches legal age.

Funding the Account

You must fund your brokerage account before buying stocks. Typical funding methods:

• Bank transfer (ACH in the U.S., SEPA in Europe).
• Wire transfer for faster settlement of larger amounts.
• Check deposits (slower clearing).
• Deposits from linked bank or cash balances in-app.

Settlement: most stock trades settle on a T+2 basis (trade date plus two business days) in major markets, meaning cash and securities transfer finalize after two business days. Some brokers show buying power immediately for margin accounts or when offering instant deposits, but regulatory settlement timelines still apply.

Many brokers have no minimum deposit to open an account, though some services and account types may require minimums.

Who Cannot (or May Be Limited From) Buying Stocks

Jurisdictional and Sanctions Restrictions

Not everyone is allowed to open accounts with every broker. Broker-dealers comply with domestic and international regulations and may block or restrict residents of certain jurisdictions. Examples of limits:

• Residents of sanctioned countries may be prohibited from transacting with U.S.-listed securities.
• Brokers sometimes restrict accounts from jurisdictions lacking treaty or compliance arrangements.

If your country is restricted, local exchanges, regional brokers, or cross-listed instruments (like ADRs/GDRs) may be alternatives, subject to local laws.

Restricted and Control Securities

Some securities are not freely tradable for all investors:

• Restricted shares: issued in private placements or to insiders; they often carry transfer restrictions and may require holding periods (Rule 144 in the U.S.).
• Private placements and pre-IPO allocations: typically available only to accredited or institutional investors.
• Control shares and lock-up agreements: company insiders may be prevented from selling for a period after an IPO.

These limits do not prevent most retail investors from buying publicly traded shares on exchanges, but they do affect access to private deals and certain allocations.

Regulatory or Internal Broker Limits

Brokers may set internal rules that limit trading for some clients. Common examples:

• Pattern Day Trader (PDT) rules (U.S.): accounts classified as pattern day traders and using margin must maintain minimum equity (often $25,000) to continue day trading.
• Short-sale restrictions: brokers may refuse to lend shares to short sellers or impose locate requirements.
• Eligibility for leveraged products: options, futures, and certain leveraged ETFs require additional approvals and suitability checks.

Brokers can also restrict trading in specific securities during volatility or when they cannot obtain reliable quotes or clearing capacity.

Special Investor Categories and Account Types

Individual, Joint, and Custodial Accounts

• Individual accounts: single-name accounts controlled by one adult.
• Joint accounts: two or more adults, often used by couples or business partners. Joint accounts can have survivorship features.
• Custodial accounts: an adult custodian manages assets for a minor until the minor reaches legal age; commonly used for gifting or saving for education.

Each account type has tax and ownership implications; choose based on goals and legal advice.

Retirement Accounts (IRAs, 401(k) rollovers)

Tax-advantaged retirement accounts allow stock investing with special tax treatment. Examples include individual retirement accounts (IRAs) and employer-sponsored plans (401(k)). These accounts have contribution limits, distribution rules, and eligibility criteria. Brokerage firms typically offer IRA accounts where investors can buy stocks, ETFs, and mutual funds within the tax-advantaged wrapper.

Margin Accounts and Leverage

Margin accounts let investors borrow against securities to increase buying power. Important aspects:

• Approval and suitability checks are required before margin is enabled.
• Margin amplifies gains and losses and can trigger margin calls if account equity falls below maintenance requirements.
• Pattern day trader and regulatory rules can impose minimum balances.

Margin trading is higher risk and should be used with caution.

Institutional and Accredited Investors

• Accredited investor: a regulatory designation (definition varies by country) that grants access to private investments, certain private placements, hedge funds, and pre-IPO deals. Common U.S. tests include income or net worth thresholds.
• Institutional investor: entities like pension funds, mutual funds, and insurance companies with professional governance.

Accredited and institutional status affects access to non-public offerings, not standard public exchanges.

How to Buy Stocks — Practical Steps

Choosing a Broker

When deciding which broker to use, evaluate:

• Fees and commissions: many brokers offer $0 commissions for standard U.S. stock trades, but check for other fees.
• Platform usability: mobile app quality, execution speed, and ease of placing orders.
• Research and tools: company research, analyst reports, screeners, and educational resources.
• Order execution and routing quality: slippage and execution speed matter for active traders.
• Account minimums and funding options.
• Customer support and regulatory protections.

If you are Web3-oriented, consider brokers and wallets that integrate with DeFi and on-chain custody. For bridge solutions and Web3 custody, Bitget Wallet can be a recommended option for those using Bitget services.

Types of Orders and Execution

Common order types:

• Market order: buy or sell immediately at the best available price; fast but price is not guaranteed.
• Limit order: execute only at a specified price or better; gives price control but may not fill.
• Stop order (stop-loss): becomes a market order when a trigger price is hit.
• Stop-limit order: becomes a limit order at the trigger price, combining stop and limit behavior.

Best execution: brokers have a duty to seek the most favorable terms reasonably available for client orders. Execution quality can vary by broker and market conditions.

Direct Purchase and DRIPs (Dividend Reinvestment Plans)

• Direct Stock Purchase Plans (DSPPs): some companies allow investors to buy shares directly from the company, sometimes with low fees.
• DRIPs: dividend reinvestment plans automatically reinvest cash dividends into additional shares, often without commissions and sometimes at a discount.

DRIPs and DSPPs are options for long-term investors who prefer automated reinvestment.

Fractional Shares and Micro-Investing

Many brokers now offer fractional shares, letting investors buy portions of high-priced stocks with small dollar amounts. Fractional shares lower the barrier to entry and make diversification easier for small accounts.

Micro-investing apps and fractional trading broaden access, allowing investors to start with low sums and gradually build positions.

International Investors and Non‑U.S. Residents

Account Opening, Documentation, and Tax Forms

Non-U.S. residents can often open accounts with U.S. brokers that accept foreign clients, but requirements include:

• Valid passport or national ID and proof of address.
• Tax forms: U.S.-listed stockholders who are nonresident aliens usually complete a W-8BEN form for tax treaty benefits and to establish foreign status for withholding tax on dividends.
• Withholding: dividends paid to nonresidents may be subject to withholding tax; rates depend on tax treaties.

Expect additional documentation and potentially longer verification timelines for foreign accounts.

Market Access and Local Brokers

Overseas investors have several routes:

• Open an account with a U.S. broker that accepts foreign clients.
• Use a local broker with access to international markets and ADRs/GDRs.
• Trade shares listed on local exchanges or cross-listed instruments.

Each route has tradeoffs in fees, tax reporting, and available instruments.

Costs, Fees, and Taxes

Commissions, Spreads, and Other Fees

• Commission trend: many brokers provide $0 commissions for online U.S. stock trades, but other costs remain.
• Spreads: the bid-ask spread is a real cost when buying illiquid stocks.
• Routing and payment-for-order-flow can affect execution quality.
• Account fees: inactivity fees, paper statement fees, and transfer-out fees can apply.

Always review a broker's fee schedule to understand total costs.

Taxes and Reporting

Tax obligations depend on jurisdiction and account type. Key points:

• Capital gains tax: profits from selling stocks may be taxed; rates differ by holding period and jurisdiction.
• Dividend tax: dividends are taxable income and may have favorable tax rates for qualified dividends (U.S.) or ordinary rates.
• Nonresident withholding: dividends to foreign investors are often subject to withholding; consult tax treaties.
• Basis and recordkeeping: track cost basis and holding periods for accurate tax reporting.

Brokers typically provide year-end tax forms (e.g., 1099s in the U.S.) but investors must retain transaction records for accurate reporting.

Risks and Considerations

Market Risk, Liquidity, and Volatility

Stocks can lose value. Main risks:

• Market risk: entire equities markets can decline.
• Liquidity risk: thinly traded stocks may have wide spreads and price gaps.
• Volatility: prices fluctuate; short-term price movements can be large.

Investors should align risk tolerance with investment strategies and time horizons.

Due Diligence and Diversification

Perform research before buying individual stocks. For many beginners, diversified instruments like ETFs or mutual funds provide broad market exposure and reduce single-company risk. Avoid concentration in a few stocks unless you understand the risks.

Investor Protections and Limitations of Insurance

• Securities investor protection: in the U.S., broker-dealer customer accounts are generally covered by SIPC for missing assets if a broker fails, up to specified limits. SIPC covers custody and missing securities but does not protect against market losses.
• Bank insurance: FDIC protects bank deposits, not securities.

Always confirm the protections that apply to your chosen broker and country.

Comparison: Buying Stocks vs Buying Cryptocurrencies

Key differences:

• Intermediaries and execution: Stocks trade through regulated broker-dealers and exchanges with clearinghouses. Cryptocurrencies trade on crypto exchanges and on-chain peer-to-peer networks.
• Regulation and investor protections: Stock markets are subject to securities laws, disclosure rules, and investor protections like SIPC (broker-specific). Crypto markets are variably regulated and protections differ by jurisdiction.
• Settlement systems: Stock trades settle through central clearing systems (T+2 in many markets). Crypto settlements occur on blockchains and can be instant or delayed, depending on chain throughput.
• Volatility: Many cryptocurrencies exhibit higher intra-day volatility than large-cap equities.

If you use both asset classes, consider custody strategies that fit your risk and regulatory needs. For Web3 custody and cross-asset workflows, Bitget Wallet offers integrations that may suit users active in both stocks and crypto.

Common Misconceptions and Frequently Asked Questions

• Do I need a lot of money to start? No. Fractional shares and no-minimum brokers mean you can start with small sums. But diversification and fee awareness matter.

• Can foreigners buy U.S. stocks? Often yes, but you will need to provide additional documentation and tax forms (e.g., W-8BEN) and may face dividend withholding.

• Are stocks insured? No — investments are not insured against market losses. Custody protections like SIPC cover missing assets if a broker fails, not declines in market value.

• What's the minimum age to trade? Usually the age of majority (commonly 18). Minors can invest via custodial accounts.

• Can anybody buy stocks in an IPO? Not necessarily. IPOs often allocate shares to institutional investors and retail allocations may be limited. Private placements are typically limited to accredited investors.

Step-by-Step Beginner’s Checklist

1. Define goals and time horizon (growth, income, retirement, trading).
2. Choose a regulated broker that fits your needs (fees, usability, protections).
3. Complete KYC and provide ID and tax information.
4. Fund your account using an approved method and confirm settlement rules.
5. Start with a plan: decide whether to buy individual stocks, ETFs, or use DRIPs.
6. Choose order types: market for immediate execution, limit for price control.
7. Place the trade and monitor execution; keep transaction records.
8. Review tax forms and maintain cost-basis records.
9. Rebalance periodically and maintain diversification.

For Web3-oriented investors, consider custody and bridging solutions. Bitget Wallet can be used alongside brokerage accounts for on-chain asset management and Web3 interactions.

Regulation, Compliance, and Where to Get Help

Key Regulators and Laws

• Securities and Exchange Commission (SEC) — oversees securities markets in the U.S., enforces disclosure and antifraud rules.
• Financial Industry Regulatory Authority (FINRA) — self-regulatory organization for broker-dealers in the U.S.
• Local regulators: each country has its own securities regulator (e.g., FCA in the U.K.).

These bodies supervise market conduct, broker licensing, and investor protections. Brokers are required to follow rules on transparency, best execution, custody, and reporting.

Consumer Resources and Education

• Broker education centers: many brokers provide articles, videos, and simulated trading tools.
• Regulator resources: investor.gov and local regulator sites offer guides on fraud prevention and basics.
• Independent personal-finance sites and industry publications publish guides and explainers — use multiple sources and prefer primary regulator material for legal questions.

If you need hands-on help, speak with a licensed financial professional. For technical help with Web3 custody, Bitget support and Bitget Wallet documentation can assist users integrating on-chain activities.

References and Further Reading

Sources consulted for structure and best practices include The Motley Fool, NerdWallet, Bankrate, Investopedia, Vanguard, Charles Schwab, E*TRADE, Green America, and official regulator resources such as the SEC and FINRA. These sources provide practical investor education, up-to-date fee and execution discussions, and regulator guidance.

As of 2024-06-01, according to publicly published regulator and exchange statements, U.S. equity markets handle daily trading volumes measured in the tens of billions to low hundreds of billions and maintain total market capitalizations in the tens of trillions of dollars, highlighting the scale and liquidity available to retail investors.

See Also

Related topics you may want to read next:

• How to Open a Brokerage Account
• Dividend Reinvestment Plans (DRIPs)
• Margin Trading
• Fractional Shares
• Investing vs. Trading

Final Notes and Next Steps

Can anybody buy stocks? For most people the answer is yes: with valid ID, an eligible account, and funding, retail investors can access public markets. Restrictions exist for legal, regulatory, and suitability reasons. Start by clarifying goals, selecting a regulated broker, completing KYC, and using small positions or diversified funds while you learn.

If you are exploring Web3-enabled workflows or want a wallet that works with both on-chain assets and exchange services, consider Bitget Wallet and the Bitget ecosystem for integrated tools. To continue learning, review broker education pages, regulator guides, and trusted financial publications.

Further explore Bitget resources to learn how to combine traditional market access with on-chain tools and custody options. Begin with a simple checklist: set goals, choose a broker, verify identity, fund the account, and place your first thoughtful trade.

Reported dates and summaries: As of 2024-06-01, the overview of market scale above reflects publicly available exchange and regulator reporting. For the latest, check your local regulator and the reporting pages of major exchanges and supervisory authorities.