What is a Brokerage Account?

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A brokerage account is an investment account that allows an investor to buy and sell stocks, mutual funds, ETF's (exchange traded funds), and trade options with a brokerage firm. The licensed broker places trades on behalf of the client and holds financial assets. Brokerage accounts include Robinhood, Webull, TD Ameritrade, E*trade, Charles Schwab, Fidelity, Vanguard, Merrill Lynch, TradeStation, IRA, and your 401K. That's right, if you own a 401K you're an investor! So basically before you buy stocks or invest you need a special type of platform that involves brokers to place the orders.

How to Open a Brokerage account

Because of advanced technology today we can open an account directly from our phones. Go on to the brokerage website whom you wish to open an account with and get some information ready. You'll need to take a picture of your driver's license, input or take a picture of your social security number, home address, and other basic information. These brokerage accounts will ask investment questions to see how well you know about investing so answer it to your best abilities. The process may take a few days to get your account approved so remain patient in the meantime.

Which Brokerage account should I choose?

When choosing an account it's best to pick one that's suitable for your needs. Because of Robinhood, Investing on different platforms became easy and free. Robinhood is recommended for beginners as it has no fees and no minimum balance, able to invest in cryptocurrency, and it's user friendly. Robinhood and Webull offers free stocks when you sign up. Only problem to be aware about, if there is ever an issue with your money you can only send emails with customer support and there has been cases of hacked accounts through Robinhood. No phone calls or physical locations. TD Ameritrade, E*trade, Fidelity, and Charles Schwab all offer outstanding customer support, have physical locations you can walk in, a debit card, and personal checks to transfer funds easily. For my option traders you'll only have to pay $0.65 per contract.

Are My Funds Insured?

Yes, your money is safe and just like keeping money in a traditional bank the FDIC got your back. Now with investing, SIPC will protect you. Securities Investor Protection Corporation (SIPC) protects investors from any loss involving cash, securities, stocks, and bonds. Note that SIPC will not protect you if the value of the security declines. Meaning, you bought Tesla at $100 and then it dropped to $20 a week later. SIPC will not help with that decline. $250,000 limit is for cash and $500,000 for total limit.