How do you set up a brokerage account in the US. What are the dos and the don’ts.
What’s in this tutorial?
In this tutorial we outline what you need to do to set up a brokerage account and get trading stocks.
Table of contents
There are 4 parts to this tutorial
- First, what is a brokerage account
- Then, what do you need to prepare
- Thirdly, the Dos
- And finally the Don’ts
Part 1. So what is a brokerage account?
Well, it’s a bit like a bank account. Except its not a place for cash. But a place to put the stocks you own.
And just like a bank account you can expect
- online access
- and lots and lots of mail
If you are wondering whether Stockflare provides brokerage accounts, well, no.
- holding people’s money is a regulated business
- so is advising people
- and at Stockflare we are an information company
- not a financial company.
Fortunately, there are lots of well know brands that you can use to open a brokerage account. Here are some of the best know ones:
- TD Ameritrade
Part 2. What do you need to open a brokerage account?
Firstly, you need to prepare yourself for a hideous questionnaire. Asking you all sorts of personal details.
Then, you need to be able to prove who you are, e.g. a driving licence
Third, you have to prove where you live, a proof of address
Next, you have to some savings ready to transfer into the brokerage account.
- make sure you have enough to meet their minimum balance
- and no credit cards. That’s debt. You don’t borrow to invest. You save to invest
Lastly, you will need a lot of patience. Setting up a brokerage account takes time, usually 24 hours.
Part 3. Dos
So what are some of the key Dos.
Firstly, we recommend you go for a low-cost broker
- One that is reputable
- Check the fees to make sure there’s nothing extra
- Check what the minimum balance is, to be allowed open an account
Second, once you are set up, check their website to see if there are any useful tools or data that can help you manage your money and make decisions.
Third, unsubscribe from their marketing. Otherwise they’ll be trying to get you to trade more. Or buy more services from them.
Finally, expect lots and lots of mail.
Part 4. Don’ts
What about the Don’ts?
Don’t open a margin account:
- lots of brokers will let you borrow money and double up on your stock investments
- this is speculation, you’d be trying to make risky quick profits
- it’s a brilliant way to lose money and lose it quickly
Secondly, don’t try trading options
- this is another amazing way to speculate and lose
Thirdly, don’t rush out and subscribe to the Wall Street Journal. You’ve better things to do with your time that watching CNBC or reading the Journal. If you choose right, and chose for the long-term, you don’t need to be up to date day-by-day minute-by-minute.
And finally, remember all the mail. Don’t throw it out. Amongst the avalanche there are some real gems. For example annual reports from the companies you own.
So setting up a brokerage account isn’t too painful. Just requires a lot of patience. And please drop us a note as we’d love to hear who you use and why.