Margin account
A margin account allows you to borrow money from your broker to invest, using your existing investments as collateral. This can increase both gains and losses. If the value of your account falls too far, the broker may require you to deposit more money or sell assets (a situation known as a margin call).
Margin accounts offer more flexibility and advanced trading options, but they carry higher risk and aren’t a good fit for many beginners.
How to choose a brokerage account
One of the most important decisions you’ll make is how much support you want from your brokerage. Most accounts fall into one of three service levels.
- Self-service accounts are available through discount brokerages. You'll pay low or no trading fees or account fees. You will manage the stock portfolio, and all trades yourself. The broker may provide you with access to tools for research and analysis, such as stock and fund screeners.
- Automated accounts, known as robo-advisor accounts, manage your portfolio with predetermined rules that align with your risk tolerance and investment timeline. You fund the account, and the trades are made automatically. You likely don't have free access to a financial advisor for questions and concerns. A typical annual fee for a robo-advisor account would be 0.25% of your balance. That works out to $2.50 for every $1,000 you have invested.
- Full-service accounts come with a human financial advisor who can develop a personalized investment plan that fits your needs and situation. You may pay trading fees or an annual, percentage-based account fee of 1% to 1.5% of your account balance. Note that per-trade fee structures compensate your broker for higher-frequency trading. Percentage-based account fees reward the broker when your net worth increases.
Beyond service level, there are several other factors to consider in choosing the right account, such as:
- Account and transaction fees
- Support for fractional investing
- Ability to set up recurring investments or dollar-cost averaging
- Ease of transferring money in and out
- Quality of tools, research, and educational content
- How uninvested cash is handled
A quick shortcut if you’re comparing options
If you’d rather skip straight to vetted platforms, we maintain a regularly updated list of the best brokerage accounts, highlighting options for beginners, hands-off investors, and more active traders. It’s a helpful starting point once you know what features matter most to you.
For a deeper breakdown of what to compare, and how priorities change as you gain experience, see our full guide on how to choose a brokerage account.
