These accounts are offered by companies such as Charles Schwab (SCHW -0.10%), E*TRADE from Morgan Stanley (MS -0.39%), and many others, as well as by newer app-based platforms, including Robinhood (HOOD -2.98%) and SoFi (SOFI -2.23%).
Opening a brokerage account is typically a quick and painless process that takes only minutes. And most will allow you to invest with "play money" first to make sure the platform is a good fit for you.
You can easily fund your brokerage account via an electronic funds transfer, by mailing a check, or by wiring money. Opening a brokerage account is generally easy, but you should consider a few things before choosing a particular broker:
Type of account
First, determine the type of brokerage account you need. For most people who are just trying to learn stock market investing, this means choosing between a standard brokerage account and an individual retirement account (IRA).
Both account types will allow you to buy stocks, mutual funds, and ETFs. The primary considerations here are why you're investing in stocks and how easily you want to be able to access your money. If you want easy access to your money or are just investing for a rainy day, you'll probably want a standard brokerage account.
On the other hand, if your goal is to build up a retirement nest egg, an IRA is a great way to go. These accounts come in two main varieties -- traditional and Roth IRAs -- and there are some specialized types of IRAs for self-employed people and small business owners, including the SEP IRA and SIMPLE IRA.
A key point is that IRAs are highly tax-advantaged places to buy stocks. However, the downside is that it can be difficult to withdraw your money until you get older.
There are also some qualifications for investing in IRAs and taking the tax benefits, such as the Roth IRA income limits, so be sure you qualify before you invest. One potentially appealing feature of Roth IRAs is the ability to withdraw your contributions (but not your investment profits) at any time and for any reason.
Costs and features
The majority of online stockbrokers have eliminated trading commissions for online stock trades. So, most (but not all) are on a level playing field as far as costs are concerned, unless you're trading options or cryptocurrencies, both of which often have trading fees. However, there are several other big differences.