How To Open An Investment Account

Picking the best investment account for your needs isn’t as hard as it seems — promise. Once you determine which account you need and shop around for a brokerage service, you should have no trouble picking the right one for you. 

The Motley Fool offers a few tips to help you open a brokerage account.

Decide Which Type Of Account You Want

There’s a reason why you want to invest. What is it? Do you want a brokerage account to build an emergency fund or help you reach a short-term objective? 

If that’s the case, you want a brokerage account with high liquidity. Traditional investment accounts don’t come with many tax benefits, but unlike retirement vehicles such as 401(k)s, you can withdraw your funds penalty-free whenever you want. 

But, if you do want to save for retirement, your best choice is an IRA account. You have several options: 


  • Traditional IRAs, which don’t tax contributions. You can’t withdraw your funds until you turn 59.5, and you will have to pay taxes on the amount.


  • Roth IRAs, which do tax contributions. However, the funds are tax-exempt when you withdraw them. Except for investment returns, you can remove your money from this account at any point.


Shop For The Best Broker For You

You can find several online brokerage services with no commission fees and offer rewards when you meet specific criteria. Pay attention to the pricing plans, especially if you think you will trade things besides stocks. 

Additionally, see if you can find a brokerage offering a special promotion for new customers. Some services offer deals like free shares or even cash rewards for signing up.

Look At Services And Features

While you want a broker that’s affordable, going with the cheapest service may not be the best choice. There are other factors you should account for when choosing a brokerage, such as:


  • Research availability: Most brokers offer their own ratings plus third-party research from the S&P 500, Morningstar, and other companies.


  • Foreign exchanges: With some brokers, you can exchange the funds in your account for foreign currencies to buy and sell in global markets. If you plan on participating in international markets, find a broker that gives you this ability.


  • Online trading: Many brokers have apps and websites to make it easier to monitor your accounts. Some even let you experiment with their platform before creating a new account, so you know what to expect. You’ll also want to check out reviews from other customers to know how well these tools work.


  • Convenience: If you open an investment account in-person at your bank, it’s essential to know whether or not you can also access these services online. Generally, most banks do offer online access, but it’s good to check just in case.


Picking A Brokerage

Once you find out everything you need to know about a few brokers (including fees, costs, and features), it’s time to decide which one is the most suitable to meet your investment goals.

File An Application

You can file online or in-person, depending on the broker. Make sure you have everything you need, like your government ID, Social Security number, and other paperwork if you want margin privileges or options trading. You’ll also need details such as your net worth, employment, assets, and your goals.

Add Money To Your Account

Brokers typically offer several ways to fund your account, such as:


  • Electronic funds transfers (EFT)
  • Checks
  • Wire transfers
  • Asset transfers
  • Stock certificates


Lastly, as you prepare to put money into your new investment account, make sure that you are mindful of your broker’s minimums. Brokerage services have different minimums depending on the type of account (e.g., taxable vs. retirement), and they might also levy additional stipulations for margin accounts.

Begin Researching Investments

After you put money into your account, you should do some research about trading, so you make the right decision. Also, learn how to develop a diverse portfolio so you can shield yourself from risk and hopefully enjoy even more returns down the road.

Creating an investment account is a proactive way to ensure your future financial security. Whether you opened a retirement account or want to save up for a rainy day, a brokerage account is an excellent way to protect yourself. 


  • The Ascent Staff. “How to Open a Brokerage Account: A Step-by-Step Guide.” The Motley Fool, The Motley Fool, 1 Apr. 2020,
Ian Schindler