In the next 60 seconds, we'll usher you through the five major steps to choosing and setting up a brokerage account. Start your stopwatches, Fools...
0:57: 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.
0:50: Consider what you'll be investing in
While we're partial to stocks, you may also want to invest in mutual funds (particularly index funds), options, bonds, or certificates of deposit (CDs). Not every online broker will offer all of these, so make sure you can buy what you want through your broker.
0:38: Compare broker fees and services
Check out and compare how much different brokers will charge in commissions and fees. For a quick comparison of four major brokerages, check out this aptly titled Broker Comparison Table, where you can see how some of our sponsors stack up. For extra credit, visit other brokerage sites to see what they bring to the table. You'll of course want to find out information about trading commissions, but also compare account maintenance fees, IRA custodial fees, and other costs.
Don't simply judge online brokers by how much they charge. Some have a lot more to offer. Eyeball this checklist to help determine what additional services interest you:
- Phone trades
- Research products
- Local offices
- Check-writing capabilities
- ATM access
- A free Koosh ball
0:21: 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. The broker does all the work!)
0:03: 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 clicking over to my brokerage account twice today." Or "I'm only a few trades away from owning an island next to that tow-truck driver."
Whew! Done in just under 57 seconds. Congratulations, Fool! You've just taken a giant step toward controlling your financial future.
For those of you with a few extra minutes to spare, here's some additional reading: