How to Open a Brokerage Account and Start Trading
Ready to start investing, but not sure how to start? Well, the first thing you need to figure out is how to open a brokerage account. The good news is this part is incredibly easy. The only hard part is choosing which brokerage will work best for you.
But in all honesty, the easiest way to get started is by opening an account with any of the big discount brokerages. Take your pick. Fidelity, TD Ameritrade, E-Trade and Charles Schwab all offer similar services. For the most part, account minimums and commission fees are a thing of the past – though some brokerages do still charge commissions on options trading. And some offer more comprehensive research than others. For a more complete breakdown of our top brokerages, click here.
Click around. Check ‘em out. See which one appeals to you the most. And follow your gut. Because for the most part, they’re all capable of the same things. If one appeals to you more aesthetically, then that’s probably the one for you. Just don’t let the decision-making process slow you down. After all, the sooner you can start putting your money to work the better.
However, if you find that you wind up liking a different brokerage from the one you initially chose, it’s not difficult to switch. All you have to do is contact the new broker and have them initiate a transfer of stocks, bonds, options, mutual funds, etc. from your old broker. And opening a new brokerage account shouldn’t have an impact on your credit score. But we’re getting ahead of ourselves here. Let’s talk about what you need and how to open a brokerage account.
How to Open a Brokerage Account in a Matter of Minutes
There are all sorts of accounts out there for investors. You’ve got managed, accounts, Roth IRAs, 401(k)s, and 529 Plans – which are investment plans for education. But to make things crystal clear, we’re going to be explaining how to open up a straightforward brokerage account.
In this example, we’ll be using Fidelity. The process starts with a simple question. Will this be an individual or joint account? Simply choose which applies to you.
You’re then asked to fill out a brief form that contains your personal information. This consists of your name, social security number, birthdate, phone number, home address and email address. If for any reason you are not comfortable submitting this information online, you can also head to a local branch and set up your account there.
If you choose the easier, online signup process, once you’ve filled out the form, you’ll be sent a page with an array of terms-and-conditions documents. Of course, we recommend opening, reading and saving each of these documents… just like we do with every terms-and-conditions page we come across.
Once you agree to the aforementioned terms and conditions, your account will be open and ready for business. The only real requirement that could hinder your ability to open an account is your age. You have to be at least 18 in most states. But those younger than that can have their parents set up an account for them – depending on the brokerage firm. And in some instances, a brokerage might require a driver’s license, passport or other form of government-issued ID to finalize opening an account.
You’ve Opened an Account. Now What?
Once you’ve figured out how to open a brokerage account, the next step is funding it. If you set up your account in-person at a branch location, they should be able to deposit a check for you on the spot. If you opened your account online, you’ve got a few options to choose from.
You can initiate a one-time transfer from your bank account. At this point, you can set up a transfer of assets from an old account to this new one, as well. And there is also an option to print and mail in a paper transfer form, for those who are old-school.
One of the options we like the most though is the ability to set up recurring transfers from a bank account. This is an easy way to make sure that you’ve always got money in your brokerage account, ready to be invested. You get to choose how much and how often. And you can easily make changes at any time.
However, if you’re just looking to get started as soon as possible, you can use a one-time transfer. All you’ll need is your routing and bank account numbers. The transfer won’t be immediate, though. And it can take as long as three business days for the first transfer. But once the account is established, transfers will be much faster in the future – and your account may offer the ability to trade on margin.
The Bottom Line on Opening a Brokerage Account
Like we mentioned above, most online brokerages vary in their overall design. But they all have the same general features for placing a trade. So the broker’s website you chose might vary slightly from the process outlined above. But to rehash, those trying to figure out how to open a brokerage account will need to the following information:
- Full legal name
- Social security number (or taxpayer ID number)
- Address
- Telephone number
- Email address
- Date of Birth
- A form of government-issued identification (possibly).
Once you’ve got all of that handy, just follow the steps above and you’ll be ready to start investing in no time at all! It really is that easy. The hard part is picking the right investments for your goals. But we’ve got you covered there too.
Read next: How to Trade Stocks for Beginners
About Matthew Makowski
Matthew Makowski is a senior research analyst and writer at Investment U. He has been studying and writing about the markets for 20 years. Equally comfortable identifying value stocks as he is discounts in the crypto markets, Matthew began mining Bitcoin in 2011 and has since honed his focus on the cryptocurrency markets as a whole. He is a graduate of Rutgers University and lives in Colorado with his dogs Dorito and Pretzel.