Tips and Considerations for Brokerage Accounts

What You Need to Open a Brokerage Account

Opening a brokerage account takes only a couple of minutes, and you just need a couple pieces of information at hand. Brokers are required to meet certain standards of knowledge in their clients and their risk tolerance, in order to prevent money laundering and funding of terrorism. Furthermore, understanding your investing experience and building a general profile enables them to offer some advice for self-directed investors. Be sure to prepare:

  • Basic Information: This is relatively straightforward, like birth date, address, employment status, tax status, etc.
  • Bank Account: Linking your checking or savings account to fund your brokerage account is usually the quickest way to do it. It typically only takes 1-2 days for the funds to move and clear.  
  • Social Security Number
  • Driver’s License or State ID

How to Pick the Best Brokerage Account for You

  • Full-Service or Discount: Depending on your financial goals, you may elect for a full-service brokerage account or for an online discount one. Full-service brokerage accounts are typically still running out of physical offices, and they offer services more than just a trading platform.. They might offer retirement planning and investment guidance, playing a larger role in your investing journey and charging higher fees than its counterpart. Meanwhile, a discount broker’s main purpose is to allow you to trade investments at little-to-no-cost. They don’t offer the hand-holding that full-service brokers do, but they have been increasing availability of educational resources as of late, such as expert recommendations and some analysis tools. Discount brokers are ideal for those who want to spend as much money as possible on the investing itself.
  • Account Minimums: Brokerage firms that allow clients to start investing with little money (even zero!) in their accounts are often recommended, giving them a solid platform to grow with time.
  • Trading Commissions: Brokers make money through commission fees associated with purchasing stocks or investing in mutual funds. Many online discount brokers, however, charge zero commissions, using their low prices to attract customers. We recommend looking out for brokerage firms that charge zero commissions with stock and ETF trades and little for options and trades assisted by brokers.
  • Investment Vehicles: Having a diverse array of instruments to choose from is ideal, so look for the brokerage firm that offers more than just your typical stocks, bonds, and options! Some brokerage firms offer thousands of mutual funds to choose from, with little fee or commission.

Some great beginner brokerage firms include E*TRADE and TD Ameritrade, among many others. Many banks even offer investing platforms, such as Capital One and Wells Fargo.


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