Over the past few years, I have had many conversations with friends and family about retirement goals and dreams. This included talks about their strategies as to how they planned on making it to the finish line. 401(k)s and other employer-sponsored retirement vehicles were mentioned frequently. But what appeared to be missing more often than not was the online brokerage account. I myself embarked on this particular adventure myself and there’s nothing better than sharing. So let’s talk about how to set up an online brokerage account…
Features to Consider
If you have been asking yourself how to set up an online brokerage account, there are many choices out there and each has different features. The choice is up to you of course, depending on your investment wants and needs. The following are a few criteria that you should take into account before opening a brokerage account.
Risk Tolerance: Are you a passive investor with a low tolerance for risk who will hold on to stocks for the duration or do you see yourself as an active trader with a high tolerance for risk?
Hands On or Hands Off: Are you comfortable trading on your own, including making all your buying and selling decisions? Or would you prefer to have a full-service broker to whom you can reach out to?
Mode of Operation: Are you constantly glued to your smartphone and expect to trade solely online? Or would you prefer other options of trading and accessing your portfolio, such as faxing or calling in?
Rates: Rates can vary from $0 – $40. Why the wide range? Because, of course, higher prices come with more service options. Depending on your needs, cheaper is not always better.
Start-Up Cost: How much are you willing to invest to get started? Some brokerages will require substantial start-up balances while others will let you dip your toe in the water with small deposits.
Bonus: Many brokerages are offering a sign-up bonus to sweeten the deal. While they can be beneficial, the choice of brokerage shouldn’t be based on the sign-up bonus in its entirety.
A few (of many) Choices
Now that you have reviewed the features to consider, you can make an educated decision as to with which brokerage you would like to invest your hard earned cash. Be sure to use our best friend Google for the entire listing of online brokerages. I will be outlining a few of the many online brokerage choices, none of which are in any particular order of preference.
Option # 1
$4.95 per trade & $0 account minimum;
$1,000 commission free trades (with qualifying deposits)
bonus: strong customer support; advanced trading platform; large selection of no-fee funds; great for active traders
Option # 2
$6.95 per trade & $0 account minimum
$600 cash bonus (with qualifying deposits)
bonus: strong customer support; advanced trading platform; large selection of no-fee mutual funds and ETFs; educational resources; more than 100 physical branches across the U.S.
Option # 3
$4.95 per trade & $1,000 account minimum
500 commission free trades (with qualifying deposits)
bonus: large selection of no-fee mutual funds and ETFs; educational resources; more than 300 physical branches across the U.S.
Option # 4
$6.95 per trade; $500 account minimum
60 days of commission free trades (with qualifying deposit)
bonus: broad selection of investing products (stocks, bonds, ETFs, mutual funds, futures, options); power trading platform
Option # 5
$4.95 per trade; $2,500 account minimum
300 commission free trades (with qualifying deposit)
bonus: ample research tools for deep dive stock analysis
-> all information above valid as of May 2017, please verify current rates and offers <-
I personally have experience with two of the above-mentioned brokerages. For one, Fidelity, which holds 401(k) investments accumulated while working my very first corporate job as well as the stock bonus (sounds fancy, not that significant) awarded by my current company. TD Ameritrade is my online brokerage of choice for my non-401(k) investments, which I have chosen based on their no-fee ETFs (my low-cost investment of choice). I’ve been a Fidelity customer for close to ten years now and a TD Ameritrade customer for about six months. I am happy with both, but please research all the online brokerage options to pick the best choice for yourself!
Are your ready to sign up for your very own brokerage account? Don’t wait! You don’t want to miss out on all those investment gains any longer!!!
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This post is not meant to serve as financial advice. You can find Financial Muse’s disclosures here!