Trading account how to open
Advertiser Disclosure Updated: Jun 4,pm How To Open A Brokerage Account Updated: Jun 4,pm Editorial Note: Forbes may earn a commission on sales made from partner links on this page, but that doesn't affect our editors' opinions or evaluations. Before you begin, you need to understand the kinds of brokerage accounts available and which features are most important for your investing goals. What are you looking to trade?
What Is a Brokerage Account? When you open a brokerage account with a brokerage firm, the firm buys and sells investing assets in the market on your behalf. The firm is also the custodian for the securities you own in your brokerage account.
There are two types of brokerage accounts: Taxable accounts and retirement accounts. You can open both kinds with a brokerage firm, but the investments you hold in either account are segregated for tax purposes.
What Is a Brokerage Account and How Do I Open One?
With a taxable brokerage account, you pay regular income tax and capital gains tax on the dividends, interest and gains on the sale of your investments. You can deposit as much or as little money in your taxable brokerage account as you wish.
These plans all have different rules regarding taxes and contribution limits that you need to understand. They also have rules regarding who qualifies to open and contribute to such accounts.