OPEN A BROKERAGE ACCOUNT

Just because you have the money does not exactly mean you can go right ahead and purchase stocks. Even if money is of essence here, it is not the only concern.

Before you can begin putting your money in the right (and possibly wrong) places (stocks), you need to open a brokerage account. And how do you go about it? Well, you need to choose what type of broker you would want help from. There are basically two types. The full service brokers are those people whose outfits scream “rich”. Well, that is because the commission they get from clients like you allows them to buy expensive suits. They typically charge $150 for a trade done in your account. Full-service means just that. The broker is supposed to give you unlimited service. This means that you can expect him to be able to sit down with you so you can go over your financial portfolio in detail, and ask everything concerning your money. So don’t be surprised if he asks you about retirement plans, kids, and home ownership. It’s not likely he wants to marry you; he just needs to know these things so he can make accurate recommendations.

Knowing the other type of broker makes you more confident to choose which broker you really want to help you open a brokerage account. Discount brokers (and deep-discount brokers) do not give out recommendations and financial advice. This means that they charge you lesser than the full-service guys. You will still be required to fill out some forms and sign contracts, but there won’t be anybody going through your bank statements. You are basically left to decide which stock will be best to put your money in. That is not such a bad deal knowing that this type of brokers demand minimal charges ranging from $5 to $30 per trade.

After choosing a broker to help you open a brokerage account, he will ask you to sign an agreement. It is highly advisable that you research and read about the industry before you plunge right in and open a brokerage account. Understanding the information in the agreement is important because it dictates your legal rights to your account. If there are clauses in the agreement that you do not understand or are not quite sure of, do not sign it. It is not also safe to trust any statements that may be made by the broker but is not in any way stated in the agreement. Signing the agreement means that you have fully understood, agreed, and are aware of the consequences resulting from that agreement. And always ask for your own copy of any documents pertaining to your account that is prepared for you by your broker.