If you’re new to the stock market, it might all seem very intimidating. Stocks are not like savings accounts or certificates of deposits, as the money involved in stocks is not guaranteed to always be safe. On top of that, the principal value of stocks can fall or rise. If you lack sufficient knowledge about investing, you’ll need to start doing some reading and watching video tutorials before opening a stock investment account.
The internet has made it easy to start an account and to establish a portfolio, but before you do that you need to determine your investing goals, risk level, and how much help you think you’ll need with a broker. Since you probably don’t have enough money to hire an all-out broker to do all of the work for you and to manage your portfolio, you can rely on internet robo-brokers and helpful resources and software.
There are different types of brokerage accounts as well. If you don’t really want your money tied up for several years, then a traditional account that allows you to withdraw your money whenever you need it might be ideal. However, these kinds of accounts usually don’t come with tax advantages and you might be required to pay tax on any profits made via investments.
If your main goal is to save for retirement, then consider an IRA. Decide whether a Roth IRA account or traditional IRA would be best for you.
Stock Investment Account With Cash-Only Option
With a cash stock market account, you will be given the choice of having margin privileges, which means that you will be allowed to borrow money to purchase stocks, and have the ones in your portfolio serve as a collateral. Take the time to research and understand the inherent risks involved with margin investing. Also, keep in mind you might have to pay interest on any money that is borrowed.
When looking for an online broker, choose one that offers a user-friendly platform and access to research so that you’ll be helped every step of the way. Some online brokerage firms allow new users to test out their platforms for a free trial before creating an account and funding it with actual money.
Most new online stock investment accounts can be funded in a variety of ways, including EFTs from a linked savings or checking account, checks, wire transfers, asset transfers, and stock certificates.
Zacks Trade is a great place to start for many investors, as long as you have some good understanding of how stocks and trading work. A stock investment account with this firm is protected by the SPIC for up to $500,000, and it only requires $2,500 to start.