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How to Open a Brokerage Account and Buy Stocks! - YouTube

Channel: The Motley Fool

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investing is one of the best ways to

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build long-term wealth but before you

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can invest you need to set up a

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brokerage account like paying your taxes

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or making a three-way call it seems

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difficult but it's actually super easy

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i'm cyril doin and in this video from

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the isense money lab we're going to

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break down how to open a brokerage

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account and what you need to watch out

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for first you need to start by deciding

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what type of account you want and then

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comparing several online stockbrokers

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you should be able to choose the one

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that best meets their needs step 1

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determine the type of brokerage account

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you need what are your investment

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objectives if you simply want to invest

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for a rainy day or for a certain

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relatively near-term goal and don't

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necessarily want your money tied up

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until you retired a traditional

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brokerage account is the way to go these

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accounts don't have tax advantages you

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may have to pay tax on investment

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profits and dividends but you are free

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to withdraw your money whenever you'd

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like if you choose a cash account your

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broker will likely ask you if you want

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margin privileges which basically means

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that you can borrow money to buy stocks

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with the stocks in your portfolio

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serving as collateral

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you'll pay interest on the broad money

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and there are some inherent risks

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involved with investing on margin that

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you should be aware of on the other hand

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if your goal is to save money for

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retirement an IRA is the best bet

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traditional IRAs can get you tax

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deductions when you contribute to them

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but you won't be able to use your money

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until you're 59 and a half contributions

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to Roth IRAs don't give you a tax

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benefit when you make them but qualified

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withdraws will be tax-free plus you can

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withdraw Roth contributions but not your

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investment profits whenever you want

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finally if you're self-employed there

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are some special options for you such as

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a simple IRA step IRA or individual 401k

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if you're specifically looking for an

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IRA check the description for a link to

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our guide to help you pick the best IRA

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step 2 compare the costs and incentives

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some major brokerages charge commissions

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some don't the costs have generally been

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coming down for the average investor but

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you need to know what you're signing up

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for so that fees don't eat up all your

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returns it's also important to review

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the brokers full pricing schedule

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particularly if you plan on trading

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anything other than stocks such as

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options funds or bonds as these often

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come with their own costs for example

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many brokers charge 75 cents per option

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contract on top of their standard

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commissioner finally many brokers offer

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incentives in order to attract business

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and you don't need to be a millionaire

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to take advantage of them I'm not saying

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that a good incentive all by itself

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should sway your decision but it's

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definitely a piece of the puzzle worth

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taking into consideration step 3

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consider the services and conveniences

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offered pricing isn't everything

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especially for new investors of course

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all things being equal it's best to find

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the lowest price but here are a few

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other things you need to consider when

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picking a broker access to research many

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brokers provide their own stock ratings

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as well as access to third-party

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research from firms such as Standard &

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Poor's and Morningstar foreign trading

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some brokers offer the ability to

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convert money in your account into

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foreign currencies in order to trade on

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international stock exchanges if this is

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important to you make sure the broker

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you choose allows this trading platforms

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the various brokerages offer a wide

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variety of trading software and mobile

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apps and many actually allow people to

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test out their platforms before opening

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account for example fidelity offers a

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demo version of its active trader pro

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platform for prospective clients to test

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drive also read some reviews of brokers

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mobile apps if being able to access your

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account on-the-go is important to you

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convenience some brokers have large

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networks of local branch offices you can

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visit for face-to-face investment

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guidance while others do not

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for example Merrill edge customers can

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get one-on-one advice and guidance at

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more than 2,000 Bank of America

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locations also brokerage is operated by

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banks offer customers the ability to

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connect their brokerage and checking

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accounts transferring money between the

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accounts in real time and may offer some

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sort of relationship discount for doing

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so for this reason it's also a good idea

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to check if your bank has an online

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brokerage even if it's not mentioned

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here this isn't an exhaustive list so

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before you choose a broker be sure to

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spend some time on a website exploring

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what it offers step 4 decide on a

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brokerage firm you've gathered your

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information about various firm costs

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fees and the conveniences they offer for

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each brokerage you should weigh the pros

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and cons as they pertain to your

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investment objectives and determine the

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best overall option for you for some

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expert recommendations check out our

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list of the best online stock brokers at

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fool.com backslash brokers the links

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down in the video description step 5

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fill out the new account application

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you can apply to open a new account

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online you'll need some identifying

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information such as your social security

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number and driver's license you may need

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to sign additional forms if you're

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requesting margin privileges or the

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ability to trade options and the broker

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will need to collect information about

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your net worth employment status and

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vegetable assets and investment goals

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step 6

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fund the account your new brokerage will

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probably give you a few options to move

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money into your account including

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electric funds transfer or EFT

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transferring funds from a link checking

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or savings account is a convenient way

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to fund the account in most cases the

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funds will post the to the account on

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the following business day wire transfer

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the quickest way to fund your account

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since a wire transfer is a direct bank

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to bank transfer of money it often takes

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place within minutes checks acceptable

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forms of check deposits and fund

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availability vary between brokers asset

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transfer if you're rolling over a 401k

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or transferring existing investments

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from another broker that's an acceptable

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funding method stock certificates yes

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these still exist if you have a paper

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stock certificate it can be deposited

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through mail into an online brokerage

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account as a final note when funding

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your new account be sure to keep your

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broker's minimums in mind many have

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different minimums for taxable accounts

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and retirement accounts and they also

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may have different minimum requirements

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for margin accounts step 7

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start researching investments

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congratulations on taking the initiative

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and opening a brokerage account your

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future self will thank you for taking

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this important step on the road toward

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financial security now comes the fun

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part

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investing before diving in it's a good

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idea to spend some time learning the

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basics of how to responsibly choose

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stocks bonds or funds as well as how to

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create a well diversified portfolio we

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have tons of other videos on the Motley

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Fool's channel about how to start doing

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your homework on stocks and we also do

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live specials featuring some of our

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analysts tops top picks around themes

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like AI and dividend investing make sure

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you're subscribed to get all that

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content delivered right to you on

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YouTube okay now what now that you know

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how to open a brokerage account and

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start investing it's time to do exactly

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that we have a broker hub set up to walk

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you through how to get started to get it

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just go to fool.com backslash brokers

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just click the link in the video

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description if you've got tips for

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newbies or for stories from your early

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investing days we want to hear them drop

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them in the comment section below and if

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you haven't already like this video and

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hit the subscribe button to get more

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content like this from the ascent it

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sounds crazy but YouTube really loves it

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when you do those two kinds of things

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and when YouTube is happy when we make

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