In order to invest in publicly traded companies, like Nike, Starbucks, and Facebook, you need to have an online brokerage account. At first, opening an online brokerage account might sound complicated, but it’s actually pretty straightforward. Here’s the inside scoop on what you need to know about opening a brokerage account.
Step 1. Select a Top-Rated Broker
Before you can invest, you’ll need to open an account. For 2018, TradeStation is currently the best online stock broker for all investors. Plus, TradeStation is offering a limited-time cash promotion for new accounts in September.
Commissions
Account minimum
Promo
Bottom Line
Ally Invest is the best online stock broker in 2018. They have the lowest commissions, no hidden fees, and free trading software and education.
Key Points
- $5 flat per trade
- Never any fees to open or maintain an account
- Free real-time level 2 market data
- Free mobile trading app and downloadable desktop platform
- Cash bonus up to $600 for new accounts with qualifying deposit
TradeStation also has a very valuable promotion for September only: Open a New Account in September and Get Up to $600 in Cash Credit
See the full TradeStation review.
Step 2. Select Account Type
There are several different types of online brokerage accounts, namely individual, joint, and entity. Joint and entity accounts are when two people want to share a brokerage account (like a married couple, for example. Entity accounts are for corporations.
When opening a brokerage account, you’ll want to select “individual”. Opening a brokerage account is similar to opening a bank account. You’ll have to verify your identity via your Federal Tax ID number, and you’ll probably be asked some questions about your income and risk tolerance.
About Online Stock Brokers
Online stock brokers are not created equal. There are some brokers out there that charge $6.95 for every trade, plus inactivity fees for stagnant accounts that make no trades in a given month.
You should avoid brokers that charge hidden fees at all costs. This is why TradeStation is fantastic, because they have no inactivity or market data fees. Plus, you’ll get access to some of the best trading software for desktops and mobile phones (100% for free).
Why Open a Brokerage Account?
One of the biggest misconceptions about investing is that it is somehow only for mega-millionaires and billionaires. Nothing could be further from the truth. Investing has never been easier and cheaper in history. In fact, it’s possible to open a brokerage account in five minutes from your mobile phone and invest the same day.
Final Thoughts
Overall, TradeStation is the best online stock broker for deeply discounted trades and free trading platforms and tools.
For the remainder of September, TradeStation is offering up to $600 in cash for new accounts: Open a New Account in September and Get Up to $600 in Cash Credit
What You’ll Need to Open a Brokerage Account
Opening an Account
It takes about 5 minutes to open an account with Ally Invest. There is no fee to open or maintain.
Verifying Yourself
You’ll probably have to answer questions about your current income and employment status.
What You’ll Need
US licensed stock brokers are required to have each client’s Social Security Number for tax purposes.
What is Options Bro?
OptionsBro.com is an online financial information site dedicated to providing simple tutorials, reviews, and comparisons on all things finance.
Collectively, we’ve spent thousands of hours examining the most popular financial products and tools. Bottom line, we simplify and explain the myriad of consumer financial options available today, so you can make decisions with ease.
Updated: September 20, 2018