Are you searching for a fast and effective way to buy stocks online?
Well, you may want to consider trying out PayPal to transfer funds and conduct online payments.
As one of the most popular payment platforms in the world, PayPal has made it easier than ever to move money securely and quickly, and now it’s possible to buy stocks using it as well.
In this article, we will explain how to buy stocks with PayPal, including the pros and cons of this approach, and some key tips to help you get started.
If you are an investor looking to speed up your investment process, this guide will teach you how to start trading stocks in the stock market with PayPal.
What is PayPal?
If you aren’t exactly sure what PayPal is and how to buy stocks with PayPal, then this is a quick summary to help you better understand the company.
PayPal is an online payment system that helps both businesses and individuals make online payments and transfer money seamlessly and securely.
When you link your bank account, credit card, or debit card to your PayPal account, you can then use it to make purchases with participating stores, or transfer money, like if you were trying to fund your investment account, for example.
Essentially, PayPal acts as a middleman between your bank and merchants and ensures that all transactions are conducted safely and securely.
In case you were interested, PayPal is also a publicly traded company, trading under the ticker symbol “PYPL”.
The company has the reputation of being a dependable and trustworthy service provider, conducting millions of transactions over the years.
Since its IPO in 2015, the company is up 104.74% all-time, though it has recently fallen from its 2021 peak quite substantially.
How to Buy Stocks with PayPal
Step 1: Get Your PayPal Account Opened and Verified
Opening a PayPal account is a quick and simple process, but before you can start buying stocks with it, you will need to verify your account.
To begin, go to the PayPal website and click the “Sign Up for Free” button in the middle of the screen.
Then, choose an account type that best suits your needs; PayPal offers two account types – Personal and Business. Here is what they offer:
Once you select an account, you must provide your personal information, including your full name, address, and email address.
You will also want to create a secure password for your account so that no intruders can access your personal information.
To verify your account, you are required to link either a bank account or a credit card to your PayPal account – follow the prompts on the PayPal website to add your bank account or credit card.
Once you’ve linked your bank account or credit card, a confirmation code will be sent to you via email, text, or phone call – Enter the code to confirm your account.
Depending on your country of residence, you may be required to provide additional info such as your social security number, passport, or driver’s license.
Finally, once all of the necessary information has been provided, PayPal will review your account and identity – this process may take a few days, so sit tight!
Step 2: Find a Broker That Accepts PayPal
Now that you have your PayPal account set up, it’s time to find an investment brokerage or trading app that accepts it as a form of payment.
Here are the five of the most commonly used brokerages and investing apps that accept PayPal
Take a look at each, and decide which one is best suited for you.
Later on, we will discuss a few criteria you should consider when choosing a broker that accepts PayPal.
PayPal Broker?: Yes
Trade Stocks?: Yes
Commission Fees: Free
Claiming the top spot on our list, eToro is one of the best trading platforms that accept PayPal as a funding method. Not only does it allows stocks, but it also offers users access to other assets like cryptocurrencies, commodities, and more. This social trading platform is fully regulated by several financial institutions, meaning that you can be comfortable storing your assets here. In addition, it also has a traditional brokerage service as well, in case you prefer a more practical approach to trading stocks.
PayPal Broker?: Yes
Trade Stocks?: Yes
Commission Fees: 0.10% to 0.30% of the Trade Value
CMC offers one of the largest selections of stocks compared to the other brokers on this list and will accept PayPal deposits with ease. Beyond that, the company offers investors access to a variety of other assets such as cryptocurrencies, forex, commodities, and more. One of the key features of CMC Markets is its Next Generation trading platform which is designed to create a customizable and user-friendly trading experience for its customers. A major drawback of CMC is that it is not offered to investors in North America, but for our European readers, it doesn’t get any better.
PayPal Broker?: Yes
Trade Stocks?: Yes
Commission Fees: 0.10% to 0.35% of the Trade Value
Another international brokerage, IG Markets is one of the best platforms to buy stock with PayPal. As a global brokerage, it’s one of the most established on the list with over 40 years of experience, offering its services in a variety of countries, including the UK, Australia, Singapore, and others. Again, if you are a stock investor outside of North America, this is another great option with ample equities to choose from.
PayPal Broker?: Yes
Trade Stocks?: No
Commission Fees: $0.02 to $0.08 Per Unit
If you are from the United States, look no further than Oanda. The brokerage has an excellent reputation and is compliant with several international financial authorities. The platform offers a wide range of financial instruments, including forex, indices, commodities, and cryptocurrencies. However, one drawback is that it does not offer individual stocks to investors. Therefore, if you are a retail investor not looking to buy and sell individual stocks, its trading platform and services more than make up for its lack of equities.
PayPal? Broker: Yes
Trade Stocks?: Yes
Commission Fees: $0.03 to $0.05 Per Unit
Another solid international broker, AvaTrade is a brokerage platform that allows investors to trade multiple assets using PayPal, including stocks, indices, and cryptocurrencies. In addition, the platform offers a wide range of trading tools, making the investor’s experience more personal and user-friendly. One common limitation found in brokerages that permit buying stocks with PayPal is that they are not accessible in the United States, including this one. Fortunately, for those who can access it, AvaTrade is another great option.
Step 3: Open an Investment Account
Before you can start buying stock with PayPal, you will need to set up an account with one brokerage listed or another one if you prefer to go a different route.
If you already have retail investor accounts set up, you can skip this step.
If you haven’t set one up yet, you will need to follow the instructions laid out by the specific brokerage.
In most instances, you will need to fill out similar information to the ones listed in Step 1.
This will include full name, address, social security number, etc.
One extra step during this process is that you will need to fund your broker account once it is approved.
We will discuss this now.
Step 4: Deposit Funds With PayPal
Now that you have your investment account set up, you can finally deposit funds into your account using PayPal.
To do so, all you have to do is go to the funding or deposit section of your brokerage account, which can usually be found in your account dashboard or under the account settings.
Then, select the PayPal button as your funding method and enter the amount you wish to deposit into your retail investor accounts.
Once you are satisfied with your funding amount, review the transaction and confirm the deposit.
In some cases, you may need to log into your PayPal account to authorize the payment being sent.
After that, you will be all set to deploy the money you deposited using PayPal and ready to begin buying stocks on the open market!
Benefits of Buying Stock with PayPal
There are many benefits to buying stocks with PayPal.
Here are a few of our favorites.
1. Speed & Convenience
Using PayPal to deposit funds is a convenient option for many as it allows you to transfer funds from your PayPal account to your broker account with relative ease.
This can help you save time compared to traditional methods of transferring, such as through a bank or via wire transfer.
In some instances, when using a traditional method, the deposit can take up to 5 days to transfer!
On the other hand, money transfers with PayPal can sometimes happen almost immediately, meaning that you can start buying stocks right away.
2. Security
PayPal is a highly secure system that uses advanced encryption technology to protect your PayPal deposits and financial information.
This means that your info remains completely confidential and that no outside parties, including employees at PayPal, can access your information.
On top of that, PayPal offers a buyer protection program and dispute resolution services if there is a problem with your transaction.
3. Cost-Effective
One of the best advantages of using PayPal to transfer funds is that it is quite cost-effective.
In many instances, transferring money with PayPal can be less expensive than traditional methods like through a wire transfer or money order.
Not to mention that in the United States, many transactions are free of charge!
As investors, it is always valuable to find ways to limit your cost basis.
That way, you can maximize your returns over the long run and make the most of your money.
Cons of Buying Stock with PayPal
Though the pros generally outweigh the cons when it comes to opening a PayPal account, it’s always good to consider a few reasons why it might not be worth it.
Here are a few of the reasons why PayPal might not be worth using as an investor.
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Transaction Fees
Although many transactions in the United States are free, there are some transactions, such as PayPal’s currency exchange fees, that can be relatively high.
Moreover, depending on your brokerage and banker, you may not be subject to a transfer fee at all between accounts, therefore, it would most likely make sense not to use PayPal for stocks.
In general, PayPal charges a flat fee of $0.99 per transaction to fund an investment account through its platform.
As such, it is better to make larger lump sum payments rather than multiple incremental transactions.
As for international transactions, fees can vary depending on the country and the currency you use.
No matter what, it’s important to review PayPal’s fee schedule and terms of service to understand what fees may be charged to you properly.
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Limited Dispute Resolution Options
While PayPal does offer a dispute resolution service, there may be instances where they are unable to resolve a transaction dispute, especially if it’s high value or complex.
If this happens, you may end up losing time and money if the situation is unable to be resolved.
To learn more about PayPal’s dispute resolution services, click the link.
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Security Concerns
PayPal is a very secure payment platform, but there is always a chance that the service gets hacked or shuts down.
If this happens, there is the potential that your PayPal account gets compromised, meaning that your personal information or money could be stolen.
To prevent these situations from happening, PayPal has its Buyer and Seller Protection Programs, which may reimburse your loss depending on the situation.
The company also monitors every transaction on a 24/7 basis to prevent fraud, email phishing, and identity theft.
As we mentioned earlier, every PayPal transaction is guarded by advanced encryption technology as well.
Overall, you should have very little to worry about in this regard.
Is it safe to buy stocks with PayPal?
After evaluating both the pros and cons of PayPal and its services, it’s clear that it’s safe to buy stocks on its platform.
With its advanced security measures in place, including “next-level” encryption and multi-factor authentication, users can be confident that their PayPal deposits are secure and protected from any external threats.
With that being said, no security measures are foolproof. Therefore, it’s always worth considering additional protection if you would like to ensure that your account is never hacked.
All-in-all, it’s a relatively safe platform, determined to maintain the security of your personal information and transactions.
How do I Choose a Broker to Buy Stocks With PayPal?
When trying to learn how to buy stocks with PayPal, here are a few of the key considerations you should make when evaluating online stock brokers.
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Regulations and Compliance
First and foremost, you want to find a broker that is a legitimate entity.
By choosing a broker that is licensed and regulated by a reputable financial authority, you are ensuring that your assets are safe and protected.
Not only that, but it also guarantees that the broker prioritizes you and its other customers over any profits it may make from you.
The last thing you want to find out as an investor is that your assets are frozen are inaccessible because the broker is facing a financial crisis.
If the whole crypto crash is any indication of what can happen when people put their trust in an unregulated broker, then it is best to steer clear… always.
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Fees and commissions:
Costs are a huge component of the online stock trading game that is often overlooked by retail investors.
But, if you want to make the most of your investments, then finding ways to limit your costs is a great way to make it happen.
Since we are trying to buy stocks using our PayPal accounts, we will want to take into account both the fees and commissions charged by the broker for trades and other services, plus the cost it takes to fund the account using PayPal.
Brokerage fees can range anywhere from $0 to over $10 per transaction (buy or sell).
If you are someone who doesn’t care for additional trading perks from the broker, then your best bet is to go with a broker who charges the least for stock trades.
On the other hand, if you are an investor wanting more out of their trading platform, then sometimes the additional transaction costs when trading stocks are justifiable.
Regardless, it is always a good idea to learn why a company charges what they do so that you can make the most informed decision for yourself.
Don’t hesitate to ask someone from the investment brokerage either, as they can provide you with the most accurate information.
As for transfer fees, PayPal charges a flat fee of $0.99 per transaction.
Overall, the cheaper, the better, but in some cases, a higher cost basis makes sense.
It all depends on your investment objectives.
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What Kind of Investment Products Do They Offer?
Since we are aiming to buy stocks with our PayPal account, we will want to make sure that the brokerage actually offers the stocks that we want.
This is a very important element of the brokerage selection process because many brokers have limited access to certain securities.
For example, when it comes to penny stocks, some brokerage companies only offer certain over-the-counter stocks, while some offer none at all.
Always look into what securities a brokerage offers because you never know if you will run into difficulties down the road and are forced to open up another account.
If you can avoid this inconvenience, why not take advantage?
To learn more about how to evaluate online trading, check out our penny stock trading apps article here.
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Reputation is Everything
“It takes 20 years to build a reputation and five minutes to ruin it.” – Warren Buffett
Reputation is everything.
If you ruin it, it can take a lifetime to earn it back.
Since PayPal has built a high-quality reputation, it is reasonable to assume that it would only offer its services to brokerages that are capable of upholding that reputation.
With that being said, it is important to gauge a brokerage’s reputation beyond whether it offers PayPal or not.
To figure out a brokerage’s reputation, look into various reviews online from former customers and determine whether this company deserves to manage your money or not.
In the end, you want a brokerage that you can trust and respects your value as a customer.
Final Thoughts: Is it Worth Buying Stocks with PayPal?
PayPal deposits can be a quick and convenient way to transfer money to your retail investor accounts without hassle.
But is it worth it?
Well, if you’re looking for a reliable and affordable way to make online money transfers, we would argue yes.
PayPal is one of the best and most effective ways to move money without ever having to worry about whether your cash makes it over or not.
That being said, it may be less worthwhile if there is another method that is less quick but offers all the same benefits without a fee.
This could be through your bank or another financial institution, even the brokerage itself.
Regardless, it’s a good idea to evaluate your investment objectives and decide which is the best method for you.
Overall, PayPal is a top-notch platform, and it’s definitely worth considering if you are looking to buy stocks.
Are you worried about the upcoming recession? Check out our recession investing guide here.