To buy stocks, you need a stockbroker who is licensed to purchase securities on your behalf. However, before making a stockbroker decision, you need to figure out what type of stockbroker is right for you.

Four basic categories of stockbrokers are available today, ranging from cheap, simple order-takers to more expensive brokers providing full-service, in-depth financial analysis, advice, and recommendations: online/discount brokers, assisted discount brokers, full-service brokers, or money managers.

Online/Discount Brokers

Online/discount brokers are just order-takers and provide the least expensive way to start investing, as there is usually no office to visit and no certified financial planners or consultants to assist. The only interaction with an online broker is via phone or the internet. Cost is usually based on a per-transaction or per-share basis, allowing you to open a relatively low-money account. An online brokerage account allows you to buy and sell stocks/options with just a few clicks.

Because these types of brokers offer absolutely no investment advice, stock tips, or any investment recommendations, you're alone. Instead, you'll get technical support for online trading. Typically, online brokers also offer investment-related website links, research, and resources, but these may be third-party providers. Nevertheless, if you feel you're knowledgeable enough to take on the responsibility of directing your investments, or if you want to learn how to invest without making a big financial commitment, that's the way forward.

Discount Brokers with Assistance

Discount brokers with assistance are the same as online brokers, the difference being that they are likely to charge a minimal account fee for the additional service. However, this assistance is usually nothing more than just providing more information and resources to help with your investment.

Discount brokers can be like your essential online/discount brokers offering upgradable accounts or services. However, they stop giving you any investment advice or recommendations. For example, they can provide more in-house research and reports or publish newsletters with investment tips.

Full-Service Brokers

Full-service brokers are traditional stockbrokers who take the time to sit down with you personally and financially. They look at marital status, lifestyle, personality, risk tolerance, age (time horizon), income, assets, debt, etc.

Then, full-service brokers work with you to develop a financial plan that best suits your investment goals and goals. They can help with property planning, tax advice, retirement planning, budgeting, and other financial advice, hence the term "full service." They can help, if necessary, manage all your financial needs now and throughout your life.

These broker types are for those who want everything in one package. As a result, they are more expensive than discount brokers in terms of fees. Still, the value of having a professional financial advisor by your side can be worth the additional costs—accounts can usually be set at as little as $1,000.

Money Managers

Money managers are like financial advisors but can have full discretion over a client's account (hence the term "manager"). These highly skilled investment professionals usually handle substantial money portfolios and thus charge management fees (which can be pretty significant) based on assets under management and not on transactions.

Money managers are those with substantial incomes who would rather pay someone to manage their investments while doing the money-making jobs entirely. Minimum account holdings can range from $100,000 to $250,000 or more and may charge over 1% of assets under management a year.

Test Strategies before Buying Real Stocks

For those eager to learn about stock trading without spending hundreds or thousands of dollars, you can sign up for a free Investopedia Simulator account.

The simulator is a simulated online broker account for users who receive US$100,000 in pretend money, practice investment strategies or learn how to trade stocks and options in actual stock market companies.

Having determined how stock trading works and what's most important to you in a broker, you can take the next step. The pricing, features, and platforms of each broker are different, so this can be unsafe. If choosing a broker is complex, research the best online brokers or best discount brokers.