How to Open a Brokerage Checking Account

A brokerage checking account is a type of bank account that will allow you to invest in the stock market. You can use the funds in your account to buy stocks, mutual funds and bonds. You can open a brokerage checking account directly through a bank or with the help of a brokerage firm.

Difficulty: Moderately Easy

Instructions

Things You'll Need:

• Money or a separate checking account
• Stockbroker
• Identification documents
• Social security number
• Tax identification number

1. Select a brokerage firm where you will open your account. Because buying stocks is now possible online, you can choose to open your account through the Internet as well. You have lots of choices---from big brokerage firms such as Merill Lynch, Smith Barney and UBS AG to the discount firms such as Charles Schwab and Quick & Reilly. You can also consider online brokerages such as Etrade, Ameritrade and Brown & Co (see Resources).

2. Find out what is required. Most brokerage firms will require a minimum investment for you to open a brokerage checking account with them. You will also need to find out if you have to fill out the necessary forms personally or you can accomplish this online.

3. Determine what type of brokerage checking account you want to have. There are three main types of brokerage accounts: the margin account, cash management account and a discretionary account. Find out more about the features of these account types and decide on one that will suit you best.

4. Furnish the broker with required information. Your broker will ask you for identification documents such as your Social Security number and contact details. You will also need to provide him with additional information to complete your client profile such as your net worth, tax bracket and risk tolerance.

5. Fill out the forms. Opening a brokerage checking account is practically like opening a conventional bank account. You need to fill out forms and accomplish the necessary paperwork for it. Before you sign on the dotted line, however, you need to read through the whole agreement and make sure that you understand what you're getting into.

6. Transfer funds to your account. There are two ways that you can transfer money into your brokerage account, either with a checking account or with an electronic funds transfer if you're doing this through the Internet. Most of the major investment firms, however, will require a check for the initial deposit.

7. Start buying stocks.

Tips & Warnings

• Always read through every document that the broker gives you before you sign into anything. Research more about how the stock market works and what specific services the brokerage firm offers so you maximize your account. The best online brokerage firms, for instance, feature extensive resources where you can research your stocks.

Resources

• Guidelines for opening a brokerage account at the SEC
• Etrade
• TD Ameritrade