What Is a Brokerage Account?

By Catherine Brock – Updated Jul 1, 2025 at 12:16 AM

Key Points

Brokerage accounts trade assets like stocks and ETFs; taxes apply on gains and dividends annually.
Choose between self-service, automated, or full-service accounts based on your investment needs.
Opening a brokerage account is similar to a bank, choose carefully between cash or margin types.

If you want to buy and sell stocks or funds, you need a brokerage account with your name on it. Take the first step by learning the must-know details about brokerage accounts below, including your options, questions to ask, and the steps for opening and using your new trading account.

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Capital Gains Tax

The tax an investor pays on the profit made when an investment is sold.

Unlike 401(k)s, individual retirement accounts (IRAs), and 529 plans, brokerage accounts have no withdrawal restrictions or tax advantages. You fund your brokerage account with after-tax dollars. And you pay taxes annually on any realized capital gains, dividends, or interest earned in that account. Fortunately, your broker will summarize your taxable activity after the end of a year and send you the appropriate 1099s for filing your tax returns.

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Brokerage Account vs. Roth IRA: Everything You Need to Know

A Roth IRA and a brokerage accounts are both good options for investing. Find out when each type of account makes sense.

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Futures contracts, or futures, are agreements to buy or sell an asset for a predetermined price at a later date.

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About the Author

Catherine grew up in Southern California wearing a lot of black and trying to perfect the art of sarcasm. Prior to joining The Fool as a contract writer, Catherine was climbing the corporate ladder in marketing roles and dabbling in too many side hustles. When she's not writing, she can be found riding a horse in the country or shopping online for clothes.

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@catherinejbrock

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