Brokerage Accounts
This is the eleventh part of Investing Basics. You will learn what a brokerage account is, how its traded and its overall benefits.
Brokerage Accounts
A brokerage account is an investment account used to trade assets such as stocks, bonds, mutual funds and ETFs.
Brokerage accounts are good for saving for short-term goals
You can add money to a brokerage account like a bank account and then buy investments. Brokerage accounts have no contribution limits or early withdrawal penalties
Brokerage accounts are also called taxable accounts, because investment income within a brokerage account is subject to capital gains taxes
An account with an online brokerage company enables you to buy and sell investments through the broker’s website.
There are fees involved with operating the account, so be careful whilst choosing brokers.
Pros and Cons for Brokerage account
Pros
Allow Easy Diversification
No limits contributions for investing
Immediate access to money, relatively liquid
SIPC insured up to $250,000
Cons
Amount is put in investments which can gain or lose in value. You could lose all of your savings if not careful
May Have Minimum Deposit and Balance Requirements
They are Taxable
Complicated fee structure for various investment types
