4 Ways to Make the Most of Your Brokerage Account

by Maurie Backman | Published on Oct. 23, 2021

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Here's how to make sure you benefit fully from your account.

Investing in a brokerage account is a great way to grow wealth in the long run. If you have money you don't need to cover your bills, and you're all set with an emergency fund, then you may want to set up a brokerage account to buy stocks, mutual funds, and other assets.

But it's important to make the most of your brokerage account. Here are a few ways to do so.

1. Buy fractional shares

The option to buy fractional shares used to be harder to come by. But these days, a growing number of brokerages offer investors fractional share purchases.

When you buy fractional shares, you own a piece of a share of stock, as opposed to a full share. Why might you want to do that?

Say there's a company you're interested in investing in whose stock is trading for $500 a share. If you only have $250 on hand, you can't afford a full share. But if your brokerage account lets you buy fractional shares, you can still get a piece of the company you hope to add to your portfolio.

Fractional shares can make it possible to assemble a more diverse mix of investments. And that's important because the more diverse your portfolio is, the easier it may be to grow wealth over time. Additionally, a diverse portfolio could protect you in case one segment of the market takes a major hit.

2. Borrow money to trade with

Some brokerage accounts let you trade on margin, which means you borrow money to trade with. To be clear, trading on margin can be a dangerous prospect, and it's an option best reserved for seasoned investors who understand the risks. But if you know what you're doing, borrowing money to trade with could help you capitalize on investment opportunities when you're short on cash.

3. Put your investments on autopilot

When life gets busy, it's easy to forget to go into your brokerage account and buy shares of the stocks you want. You can set up recurring investments with many brokerages, so you can effectively put the process on autopilot and lower your chance of missing out on opportunities.

4. Take advantage of educational resources

Whether you're new to investing or just want to boost your knowledge, many brokerage accounts come with educational resources that can teach you more about buying stocks and other assets. Reading through investing guides can make buying stocks less intimidating. And in some cases, it could prevent you from making choices that result in losses.

There's much to be gained by investing in a brokerage account, but the key is to make sure you get as much out of your account as possible. It pays to explore the benefits your account offers, whether you've recently opened it or had it for many years.

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