What is a brokerage account? More importantly, do you know how to start one? Here’s a guide to investing for your retirement.
What Is a Brokerage Account And How Can It Help Your Retirement Investment?
Your Beginner’s Guide to Investing for Retirement
Hollywood often portrays the brokerage profession as a high-stakes, glamorous world of fast talkers and even faster money, but today very few trades are actually processed this way.
That’s because computers have replaced the need for these “floor traders,” as they’re called, and instead, have opened up the world of investing to anyone with Internet access.
Online brokerage accounts are now the easiest option for investors to purchase stocks. For people looking for a brokerage firm to invest for their retirement, it’s important to understand what a brokerage account is and how to open an online brokerage account first.
What Is a Brokerage Account?
A brokerage account is an account you open to be able to buy investments in the trading platforms. If you have an active account, you can buy stocks, bonds, mutual funds, and other investment orders.
This is a great way to secure your retirement for the future, especially if you still have a long way to go before that time comes.
Of course, an investment adviser will help you find the right kind of transaction that fits your needs.
You need to remember, though, that you can only reap the returns of brokerage investments after at least five years. If you need money within that period, then you should reconsider to a short-term investment scheme.
What Are the Different Kinds of Accounts?
1. Retirement Account
If you have a Roth or Traditional IRA, then you can open a specific account for retirement funds. This has tax advantages, but also restrictions for when and how you can withdraw your money.
If you’re employed and have contributed enough for a 401(k) match, then open an IRA. You can also open an IRA account through an online broker or robo-adviser.
2. Full-Service Brokerage Account
This is a taxable brokerage account managed by a human investment adviser or robo-adviser. They match you with the right investment for your needs.
3. Online Account
Brokerage firms now allow clients to open accounts online. They also offer brokerage services through the Internet.
These firms give clients leeway to purchase and trade investments through online trading platforms. If you already have knowledge about the processes, then you should open this type of account.
With So Many Brokers to Choose From… Here Are My Favorites
While there are many online brokerage accounts out there, I have a list of the best online brokerage account for beginners you can check and compare.
Here are some options to check:
1. Charles Schwab
Charles Schwab is one of the oldest and most widely-used brokers around. The company charges you $4.95 for every trade but now no longer requires a minimum account balance to start trading.
Schwab is not only among the most affordable of brokers, but they also have good customer service and some nice extra bells and whistles for reviewing the income in your account.
You can click here to be taken to Schwab’s new account form.
E-Trade is one of the best-known brokers in the business because of their eye-catching advertisements.
The company requires a minimum of $500 to open an account. And for most investors, E-Trade charges $6.95 for every trade.
E-Trade’s fees are a little higher than Schwab’s but E-Trade also has a nice online platform with fancy reports to monitor your account.
You can click here to be taken to E-Trade’s new account form.
3. Interactive Brokers
Interactive Brokers (or IB) is a no-frills company that is a little light on customer service but has very low fees for trading.
The company requires you to have $10,000 to open a regular brokerage account or $5,000 to open a retirement account. IB only charges $1.00 for a stock trade, or a penny a share if you’re trading more than 100 shares, and also offers discounts if you’re making large trades.
If you’re Internet-savvy and an experienced online investor, IB is a great brokerage. If you think you might need a little more support with your account, I would use one of the other options.
You can click here to be taken to Interactive Brokers’ new account form.
When you’ve found a broker you like, look for an “Open Account” button on the home screen. (Or just use the links we’ve provided.)
The site will walk you through their procedures for opening an account, which as I explained earlier is very simple and should take on average just 15 minutes!
I hope this quick rundown helps you out and finally puts you on track to make money in the markets.
Are you interested in opening an online brokerage account? Ask me questions about your retirement investment and show your concerns about starting one in the comments section below!