A brokerage account is the beginning of turning all your investments ideas into reality. You need a brokerage account in order to buy and sell stocks, mutual funds, ETFs and other assets.
There are two types of brokerage accounts – Traditional Full Service Accounts and Discount Brokerage Accounts.
- Traditional brokerage: Traditional accounts charge you a higher fee and offer a lot more services, they guide you in every respect of financial planning and hand-hold you while you build your portfolio. The positive to this is that you will get professional guidance in building your portfolio and it will be easier for you to start off. You will have access to a personal adviser who will be easily available to you and this is very similar to personal financial planning. The flip side is that it will cost you a lot more and a lot of people do not think they are getting anything that they couldn’t have done themselves.
- Discount Brokerage: Discount brokerages let you trade at a much lower fee and there is absolutely no hand-holding. This is the type of account that most people will find useful and practical. This is because your fee on trading is lower, the minimum single trade amounts are lower and the minimum balances that you need to keep in your accounts are also lower. On the flip side there is usually no access to a broker who can answer your questions and you will be trading online most of the time. So if you are looking for help along the way then you can research on your own based on the tools that the discount brokerage gives you but do not expect anything beyond that.