To buy your initial stock, you will need to find a stockbroker, sometimes called an account executive or a financial planner. They are licensed by the exchanges on which they place orders. They are bound by ethical guideline of the exchanges and the Securities Exchange Commission. Some companies do offer buying and opening an account directly, so check into it often called a DSP, Direct Stock Purchase.

Stockbrokers work for brokerage firms or "houses" that own seats on the different Exchanges. Basically, you give your broker an order, which the broker transmits to a member of the securities exchange, which makes the trade. Confirmation of the trade is then sent back to the broker placing the order and then relayed to you. This process is carried out in a matter of minutes if the price is right.

All brokers offer the following services. Holding your certificates for safekeeping. Stocks that are kept by the brokerage house is said to be held in the firms "street name", since the broker can then trade with out your signature. This has its advantages if you are doing a lot of short term trading.

In holding the certificates this provides protection against loss through the Securities Investor Protection Corporation (SIPC). Basically insures each customers account for up to a half a million except that claims for cash are limited to $100,000 per customer an does not guarantee that the dollar value will be recovered. A safe deposit box is the best bet, so have the certificates in your name and sent to you.

They also send you a statement at the end of the month describing all your transactions for the month showing commission charges, interest charges, dividends and interest received, and your account balance. You should keep track of this anyway on your own. Do keep these statements in a safe place for tax purposes.

Full service brokers, who charge more and sometimes substantially more, for trades than discount brokers. They justify their premium price by the range of services they offer. Mainly including research and summary reports that can be found in the library or on the internet if you know where to look. They also have a sophisticated research staff that periodically issues analyses of general economic, industry, and company behavior and recommends specific stocks to buy and sell. You can expect a full service broker to make these recommendations depending upon your short and long term investment goals that you all have discussed. Remember, recommending is just an educated guess and does not guarantee any success. Do your own homework also.

Discount brokers offer a discounted rate because they offer neither research information nor advice. They are simply order takers and save you 30 to 70 percent off the commissions of a full service broker. This in turn will effect your profit in the long run, so you must weigh the added commissions against the value of the advice you receive.

Many investors use a combination of full service and discount brokers depending upon your needs. If you know exactly what you want to buy or sell, use a discount broker to save on the commission fees. If you think you need advice, turn to your full service broker.

When selecting a full service broker, call around and find a few to interview. Take the time to set up an appointment and meet with them. Have them tell you about their basic feelings about their own ideals. Take a look at their knowledge on the economy, market indicators and how much volume do they do. Are they conservative or do they speculate on the pot of gold at the end of the rainbow. Keep a strictly business relationship. Then tell them your viewpoints and goals. Don’t forget to discuss commission costs and get a commission schedule. Are there transaction fees and any other fees? Remember that it is your money.

A responsible broker will do everything to get to know your personal financial needs and establish a long-term relationship. Be cautious of a broker that is constantly moving around your account and is changing it. They are recommending buy and sell ideas simply to generate commissions in their own pockets. This is how they make money. Your goal is to choose a broker that understands your goals and provides the services at the lowest possible cost. Be careful about a broker that wants to get too personal and be your friend. They are too eager to gain your trust, watch out.

Your profit is the buying price minus commissions, subtracted from the selling price minus commissions. Also Uncle Sam wants his share in taxes. Be sure to ask your broker what tax rate you will be in depending upon your income and also the time factor involved in how long you hold the security. This is also why your commission cost is so important. It is money in your pocket.

Be sure to read any of the paperwork in setting up the account and ask questions if you do not understand any detail. The only time money should change hands is when you buy something. Do not deal with someone who wants money up front to open an account r setting up a money market account.

It is a good idea to insist that the stocks are put in your own name and sent or given to you directly. No Street names of the brokerage house. Keep them in a safe place or consider a safe deposit box at your local bank. Besides, if you enroll in a Dividend Reinvestment Policy (DRIP), the company has an option that they will keep our certificates for safe keeping.

You can establish a number or different types of accounts with a stockbroker. Single or joint accounts. Joint accounts are the most common for a husband and wife or a child. The account for a minor is a custodial account; a parent or guardian must be part or all transactions. Sometimes a married couple will have two or more accounts. Each spouse will have a single account and together they will have a joint account. It is a good idea to put the long-term stocks in the joint account and the short term (quick cash) in you own single account, fewer signatures.

Set up a cash account where you can only make cash transactions, actually a check does the trick. You can place buy orders even though you do not have the cash in your brokerage account to cover the cost. Then you are given 3 business days to deliver a check to the brokerage firm. Do remember to get a receipt. It is best to get a broker that is close to your house and not across town. Also the firm is given 3 business days to deposit the proceeds from the sale of the stock in your account with the firm. Do have them send you a check and once again do not carry a balance with the brokerage house unless you plan on reinvesting within a week. Do not set up a Discretionary account. This gives the broker the right to make purchase and sale transactions without your specific approval. Can generate a lot of commissions and paperwork.