Before we get started, let’s learn:
What is a Brokerage Account?
Are you curious about buying stocks, bonds, mutual funds, and ETF’s? If you are ready to jump from an interested to an investor, you must first open a brokerage account as your first step.
Don’t get scared; you got this. Before we get into the best place to open a brokerage account, let’s understand what a brokerage account is.
A brokerage account is an account used to buy and sell securities like stocks, bonds, ETF’s, and mutual funds. You can transfer money into and out of a brokerage account much like a bank account, but unlike banks, brokerage accounts give you access to the stock market and other investments.
There are 4 types of investing accounts. For today, we will only focus on the two you will need to begin your investing journey. But, just because we love education, we want to give you the name of all 4 accounts.
Investment account types · 1. Standard Brokerage Accounts · 2. Retirement Accounts · 3. Education Accounts · 4. Investment Accounts for kids called Custodial Accounts
Now, let’s focus on the two you will need right NOW-we like to make this easier for you and less complex.
#1 PERSONAL ACCOUNT AKA STANDARD ACCOUNT
A standard brokerage account, sometimes called a taxable account or non-retirement account, offers no tax advantages for investing through the account — in most cases, your investment earnings will be taxed.
The benefit of a standard account is few rules for these accounts. You can pull your money out at any time, for any reason, and invest as much as you would like.
TAXES: Capitals gains tax on investment income (only when you sell or receive dividends)
CONTRIBUTIONS: Unlimited
WITHDRAWALS: No limits or penalties
USED PRIMARILY FOR: Stock trading, options trading, additional long-term investments after maxing out retirement accounts
#2 RETIREMENT ACCOUNT
Have you heard of an IRA ROTH OR TRADITIONAL? An IRA is a retirement account (Individual Retirement Account)
Always have a retirement account because they offer fantastic tax benefits. A retirement account, such as a Roth or traditional IRA, is a tax-advantaged investment account specifically designed for your retirement savings.
TAXES: Typically no capital gains; tax-deferred or tax-free growth
CONTRIBUTIONS: $6000 annually for people under 50
$7000 annually for people 50 and over
WITHDRAWALS: Penalties for withdrawing before a 59 1/2, unless exceptions are met (such as buying a house, medical reasons, or college)
USED PRIMARILY FOR: Long-term growth, retirement savings
I know you want to know the Best Place to Open a Brokerage Account for Black Families, and we want to make sure you have all of the information you need.
How to Open A Brokerage Account?
Here’s your step-by-step guide for opening a brokerage account:
1- Determine the type of brokerage account you need (you decide whether it is a retirement account or personal account, or both)
2- Decide on a brokerage firm (we have the 4 best brokerage firms black families should consider)
3- Fill out the brokerage account application.
4- Fund the account
5- Research Your Investments
6- Pick your investments
The Best 4 Places to Open a Brokerage Account for Black Families
Stash
Stash aims to make investing approachable for beginners. The service charges $1 to $9 a month, depending on account type. If you’re looking for a little hand-holding while you build a portfolio of stocks and ETFs, Stash may be a good fit.
Fidelity
Fidelity is a good investment broker for beginners. They are a very popular and reputable broker and are best known for their mutual funds, however, their trading platform is starting to build a name for itself. Fidelity also has great research tools and fantastic customer service.
Dough – Black Owned
Dough Is A Good Low Cost Option For Some Investors Easy Account Opening – open a dough account in as little as 3 minutes. Most investment transactions will be $0. Link your bank account to dough and transfer funds from 11,500 institutions. With up to $250 of instant funding granted on deposits, investors can be ready to trade the same day.
TD Ameritrade
TD Ameritrade is the best all-around choice for beginners because it provides the best combination of ease of use, educational content, and research tools new investors need to succeed.
NOW, LET THE OFFICIAL INVESTING PARTY BEGIN…
PARTY OVER HERE. PARTY OVER THERE.
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