Opening a brokerage account generally involves choosing an account type and broker, completing an application, funding the account, and selecting your investments.
Keep in mind that simply depositing or transferring money into a brokerage account does not mean the funds have been invested. The process for actually investing your cash will depend on the type of investments you choose and your broker.
What do you need to open a brokerage account?
Brokerage account applications require some personal details, information about your finances and employment, and some banking information.
Typically, you will need:
- A photo ID (driver’s license, passport).
- Your Social Security number or Individual Taxpayer Identification Number.
- Routing and account numbers for any bank accounts that you will transfer funds into and out of.
- Details about any beneficiaries or joint account holders.
- Your employment status, occupation, and annual income.
Most brokerages allow you to apply and open an account online. If the brokerage you choose has physical branch locations (Charles Schwab, Fidelity, to name a few), you may have the option to open your account in person instead.
6 steps to open a brokerage account
Opening a brokerage account might be simpler than you think. Follow the six steps below to open yours.
1. ID your investment goals
Before you can open a brokerage account, you’ll need to zero in on your overall investment goals and the time frame you’re looking to achieve them in.
For example, you might want to save for your child’s education, build your retirement nest egg, or simply create returns to cover nice-to-haves today. Each can require different investment vehicles, timelines, and approaches.
2. Choose the type of brokerage account
Next, decide what type of brokerage account you want. There are several types to choose from, and not every company offers all of them.
Common options include:
You will also need to decide whether you want a cash account—meaning you deposit money into the account and use those funds directly to buy investments—or a margin account. With the latter, you can borrow money from your brokerage to purchase the investments. Margin accounts can give you access to more investment capital, but you’ll pay interest on the money you borrow.
3. Choose an online broker
Many financial institutions offer brokerage accounts, but their fees and offerings can vary.
To choose the right one for your needs, you should evaluate the factors below.
- Account types offered: Some brokerages offer all three brokerage account types, while others specialize in just one or two.
- Account minimums: How much must you deposit to open an account? Some brokerage accounts have no minimums.
- Fees: Look for maintenance fees, transfer fees, and per-transaction costs like commissions, options contract fees, trading fees, and service charges.
- Investment options: What do you want to invest in? Options can include mutual funds, ETFs, stocks, bonds, fractional shares, crypto, futures, or even real estate.
- Ratings and reviews: Online reviews and ratings can help you pinpoint which brokerage companies offer the best customer service and experience.
- Physical vs. online presence: Only some brokerages have physical branches where you can open an account or get help from a live professional.
You may also want to ask friends, family, colleagues, or others you trust for recommendations. Just be sure to follow those recommendations up with research and confirm their offerings meet your budget and investment goals.
4. Complete the application
Once you’ve decided on a broker, you’ll need to fill out their application to open an account. You will need to provide personal identification and contact information; details about your employment, income, and net worth; and the account and routing numbers for any checking or savings accounts you’ll be using to fund your new account.
The application will also often ask about your investment experience, risk tolerance, and time horizon. If you’ll be opening a joint account with someone or appointing any beneficiaries, you will need information for those parties as well.
5. Fund your account
Funding your account is next. You’ll typically do this using an electronic transfer from an external checking or savings account, and the cash will be deposited into your brokerage account for you to use toward investments.
You may also be able to use a wire transfer (though this often comes with a fee) or, in some cases, a check deposit. You’d do this by mailing a check to your brokerage, uploading your check via mobile device, or stopping by a physical branch location if your broker has one.
6. Choose your investments
Finally, it’s time to choose your investments. If your account is a managed one, the investment professional assigned to your account will choose and purchase your investments.
On a robo-advised account, you will typically answer questions about your investment goals, timeline, risk tolerance, and current financial picture (how much you have in savings, your income, etc.) The robo-advisor platform then determines the investment mix most likely to help you achieve your goals and purchases it on your behalf.
For a DIY brokerage account, you’ll need to choose and purchase the investments yourself. Most major brokerages offer resources to help you learn more about your options and decide which best fits your goals and timeline.
What should you know before making your first investment?
Before making your first investment, it’s important to understand what you want to get out of the transaction and how your current financial situation factors in.
You’ll want to understand:
- How risky is the investment?
- Is it similar to your current holdings, or does it help diversify your portfolio?
- What fees will you pay?
- How long does it typically take to see returns on this type of investment?
- What factors could influence the success (or failure) of my investment?
Have a plan for how and when you’ll check in on your investments, too—particularly if you’ve chosen a DIY account. Managed and robo-advisor accounts require less oversight.
The takeaway
Opening a brokerage account is typically a pretty simple process. You’ll need personal and financial details on hand, a clear idea of your investment goals and timeline, and a sense of the role you want to play in selecting and managing your investments.
You should also compare a few brokers before choosing where to open your account. Fees, account types, and investment offerings can vary widely.
Frequently asked questions
How much money do you need to open a brokerage account?
How much you’ll need to open a brokerage account depends on the company you choose to work with and your account type. Some have no minimum opening deposits, while others will charge minimums of up to $1,000.
What do I need to open a brokerage account?
To open a brokerage account, you will typically need a photo ID, your Social Security number or Individual Taxpayer Identification Number, routing and account numbers for any external bank accounts that you need linked, details about any beneficiaries or joint account holders, and info regarding your employment status, occupation, and income.
What brokerage is best for beginners?
For a beginner, you may want a managed brokerage account. These are run by investment professionals who choose the investments and manage your portfolio’s performance on your behalf. A robo-advisor brokerage account, which uses technology to build a portfolio based on your goals, budget, and risk tolerance, could also be a good option.