One of the best ways to build wealth over time is to invest. However, if you want to invest, you’ll likely need the services of a broker. But this doesn’t mean you have to call someone up and have him or her actively manage your investment portfolio.
Thanks to the ease of the Internet, it’s possible for you to build and manage your own portfolio with the help of an online discount broker.
It’s not very hard to open an account and get started; there are a number of brokerages that offer fairly easy steps to opening an account.
9 Simple Steps to Open an Online Brokerage Account
Here are the steps to follow if you want to open an online brokerage account. This tutorial looks at TradeKing, since it is our recommended brokerage, but the steps aren’t going to be much different for other online brokerages.
- Choose Your Broker: Consider which brokerage is likely to best suit your needs. You can also look for a brokerage that offers a special promotion. Many brokerages offer free money when you open an account, allowing you to learn the ropes for no cost. Most brokerages provide online chat in order to help you through the process if you get stuck.
- Decide What Type of Account to Open: Specify whether you are opening an IRA, or a taxable investment account. You can also, in many cases, choose to open a joint account with someone else, or a custodial account (for your child).
- Fill Out Personal Information: Next, you will likely be taken to a form where you can fill out more personal information. The information requested here is required, and similar to the type of information you provide when you open a bank account. You will need to include your name, address, phone number, Social Security number, tax filing status, employment information and any other vital information. You might also need to share your driver’s license or state ID number. Have this information handy so you can complete your application faster. At this point, you might also be asked to provide information about how you will fund your account.
- Setu Up Your Login Information: Setup your login information. Choose an account name, as well as a strong password and security questions to keep your account secure. Don’t set up your account using passwords or security questions others can easily find or guess by looking at your public online profiles.
- Describe Your Situation: TradeKing asks you to fill out a questionnaire to get a feel for where you stand, — while and many other brokerages do this as well. You need to share information about your financial situation, as well as your trading experience. This can help the brokerage better serve you. You also need to disclose important affiliations and positions.
- Personalize Your Account: In order to trade more effectively — as well as set the stage if you want to trade on margin or trade options — you will be asked to share your investment objectives and risk tolerance. You can also prepare to set up an automatic investment plan.
- Agree to the Terms: Before you continue from this point, you will be asked to review the terms and conditions. Pay special attention to the fee schedule so you understand what to expect.
- Sign Your Application: After you’re done, you will have to electronically sign your application and submit it. Then, you wait for approval.
- Fund Your Account: Once you are approved, begin the funding process. You can transfer money from your bank (it might take a few days), or you can mail a check. It’s also usually possible to do a wire transfer, but that will cost you.
By using these steps, you can easily set up an online brokerage account in no time — and be well on your way to building wealth!