A Few Things You Should Know Before Opening Your Online Brokerage Account

online brokerage

Opening an online brokerage account is a great concept for a number of people. It is often more profitable and less expensive than opening up an account with a traditional broker since traditional brokers opt to have their investors pay a fee for each trade. With online brokerages, the fees are much lower than with a traditional broker. Aside from that, there is a bit more freedom, a bit less discussion and a bit more power with online brokerages than there is with a traditional broker. Additionally, you can open up an online brokerage from the comfort of your living room – and pants are entirely optional.

There are many varying reasons that investors choose to open an online brokerage account, but we are not here to discuss those. What we are here to discuss is the fact that it’s so easy to invest in this manner. We know that it’s often the getting start part that is the most difficult anytime we attempt anything new. I know from experience that if I can just work through my mental block and get things going, I can accomplish anything. I’m like everyone else; sometimes new things scare me, intimidate me and make me want to do anything but get started. In that light, I thought I’d tell you what you can expect when it comes to opening an online brokerage so that you are more likely to just do it.

Open an account online

The best part of using an online brokerage is opening your account online. It’s fast, you can work at your own pace and you don’t have to face the person to whom you are sharing your birth year. That’s a plus. All you have to do is choose a brokerage firm online and head to their website. You will find it easy to navigate most of them (and you won’t bother opening an account with one that’s difficult to navigate) so it won’t be much of an issue. all you have to do is provide your personal information and you’re good to go opening your account.

Investments you can make

Now that you have a new online brokerage account, you probably want to know what sort of investments you can make with the account. Well, we don’t know. It all depends on which brokerage you choose online. For example, if you choose to go with TD Ameritrade, you can trade anything from stocks and mutual funds to ETFs to forex to CDs. The sky is the limit. You’ll just want to check with the online broker you’re going with to determine whether or not their trade options work for you. If they don’t, it’s no big deal; move on to another firm and get what you want.

Fees associated with online brokerages

The one question people tend to ask most often is whether or not there are any fees associated with this type of account. The bad news is that you do have to pay a fee when you make a trade and when you do a few other things with your online brokerage. The better news is that these fees are a lot less expensive than they are if your real life investor is making the trades on your behalf.

We should warn you, thought, not to just go with the first company that you come across. It happens that not all online brokerages offer the same fee schedule, which means some might charge significantly more than others. Do your due diligence and check out more than one of these accounts so that you can see what options you have and how you can make them work for you.

Loans from margins

Most online brokerage accounts do allow you to borrow money from your assets if you are approved for margin trading. However, you should also know that most of these accounts do require that you repay these loans with interest. This is your money, but it’s not really your money to control in terms of spending it as you see fit unless you are able to repay it.

You should check with the online brokerage account you want to open to see what the fees are, what the requirements are and whether or not they are any stipulations to consider in terms of what you can and cannot do with your online brokerage. Additionally, many brokerages require that you keep a minimum balance to maintain a margin account. The fee might vary from brokerage to brokerage. With E*Trade, for instance, the minimum requirement in an account of this nature is $2,000.

There is always a lot to learn when it comes to online brokerage accounts, but it’s easy information to understand once you sit down and really begin paying attention. Go ahead and open your account today. Your retirement might thank you for it at some point.

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