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How to Open Up an Investment Account

Opening up an investment account keeps getting easier and less expensive.

Not long ago you would have to call your broker to buy and sell stocks. The broker would call a floor trader at the exchange. The floor trader then found a match for the trade usually at a delayed price.

Today, technology makes trading and opening an account more efficient.

Online account providers offer a wide range of useful services. Some notable online brokers are E*Trade, Charles Schwab, TD Ameritrade, Scottrade and Fidelity. They have minimum balances to open trading accounts ranging from $0-$2,500. Their basic trading fees are below $10. And a few of their financial products can even be traded at no charge.

The sign-up process is simple. First you need to fill out an application. Then you wait up to a week or two for acceptance. Be sure to have this information with you for each application.

  • U.S. Permanent Resident Address
  • Social Security Number or Tax ID
  • Driver’s License Number, State, and Expiration Date
  • Employer’s Name and Mailing Address (an employer is not always needed)

The application can be completed online. Rarely do they ask for a physical copy to be sent. Once approved, you deposit funds before trading can take place. You can mail in a check or transfer funds online from your bank. You can quickly transfer money to and from your trading account.

Online brokerages act just like your hometown bank… without paying for physical locations. This helps them offer savings and checking accounts with competitive incentives.

You can even manage all of your personal and retirement accounts online. Rolling over and managing Individual Retirement Accounts (IRAs) is easy. On an existing account, I set up a Roth IRA within minutes.

Online brokerages have many customer protections in place. The Federal Deposit Insurance Corporation (FDIC) and Securities Investor Protection Corporation (SIPC) provide a great deal of insurance on various accounts.

In some cases, online brokers are even more reliable than small hometown banks.

Setting up a trading account is easy and safe today.

If you’re just starting out, set up an investment account. It can always be reversed.

It’s the first step towards making your money work for you.


Published in Training Center