Ready, set, invest! Would that it were that easy. Actually, setting up an account with a discount brokerage firm is pretty straightforward. Here are the five steps to follow:
Step 1: Decide how much you'll invest
Will it be $500, $5,000, or $50,000? Some brokers require a minimum initial deposit of $2,000. Others require $500. And some require no minimum, or accept smaller initial deposits to open an IRA. Your first step is to figure out how much dough you plan to start with.
Step 2: Consider what you'll be investing in
The world of investment products is your oyster. Do you like stocks, mutual funds, options, bonds, certificates of deposit (CDs), or a mix of many of these? Not every online broker will offer all investment products, so make sure you can buy what you want through your broker.
Step 3: Compare broker fees and services
Compare costs at different brokers and see how much they charge for commissions. Don't stop there. Also consider account maintenance fees, IRA custodial fees, and other costs. These fees can make a big difference in your returns. Next see what services they offer, such as phone trades, research products, check-writing capabilities, and a free Koosh ball.
Step 4: Do the paperwork and sign the check!
Setting up an account is usually as easy as downloading the application forms, signing them, and folding them nicely into an envelope with a check to fund your account. You'll receive confirmation of your ability to start trading in pretty short order. Voila! (Even easier is transferring your loot from your old brokerage account to a new one. They do all the work!)
Step 5: Revel publicly
You're now "in the know." Memorize a few key lines to drop at the next office cocktail party: "I'm in the market for the long haul. Still, I couldn't help but click over to my brokerage account twice today." Or, "Have you seen what's happening with Flip Mo?"