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Tuesday, September 2nd, 2014


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Where to Open Your Investment Account

Investment firms, brokerage houses, banks and insurance companies—these are just a few of the places that allow you to open an investment account today. 

An investment account is where you buy stocks, mutual funds, CDs and bonds, and some common examples include IRAs, individual brokerage accounts and custodial accounts.  Choosing the right company can be difficult and knowing where to start your search is even harder. 

Investment Accounts – Which Company do I Choose?

The first decision you’ll need to make is what type of company is right for you.  My experience has been that investment firms, banks and insurance companies charge higher fees and have extra costs compared to brokerage houses.  This is because, in today’s market, investment firms are trying to be banks, banks are trying to be investments firms and insurance companies are trying to do it all.  The result is higher fees and poor service for the average investor. 

That’s why I recommend investing through a brokerage house like TD Ameritrade, Charles Schwab, Fidelity or Vanguard.  But even selecting the right brokerage house can be difficult with so many different service platforms to choose from. 

Investment Accounts – Research

To make the process easier, use the questions below to research the leading brokerage houses and then select the company that meets your needs the best.  It shouldn’t take more than 5 to 10 minutes to complete these questions and once you’re finished you’ll be able to make a much more informed decision.  What you should be looking for is the one that provides the best service, lowest fees and easiest access to useful information.  Don’t be overly influenced by special deals the brokerage houses may be offering today, because the deals are usually short-lived but your account will stay with the company for many years.

Investment Accounts – Website Analysis

Was it easy to reach a phone representative?
How helpful was the phone representative? (Rank 1 to 4)
Minimum account balance required
Set up fee
Maintenance fee
Fee per trade for “No Transaction Fee Funds”*
Fee per trade for “Transaction Fee Funds”**
Any extra costs?
Any special deals?

* No Transaction Fee Funds
No transaction fee funds are mutual funds that, by definition, do not require you to pay a transaction fee when you buy them.  This means whether you buy the mutual fund by phone or internet, there should be no transaction fee charged.  You should confirm the brokerage house you choose allows you to buy these types of funds and does not charge a fee for them.

** Transaction Fee Funds
Transaction fee funds are mutual funds that do require you to pay a transaction fee when you buy them.  A transaction fee shouldn’t be confused with a sales load, these are different.  Transaction fees can range from $9.99 to $99.99 depending on the brokerage house.  A fair transaction fee is about $15 per mutual fund, but there are some very good mutual funds available that don’ charge any transaction fee at all.  Unless you have more than $1,000 to invest you should probably avoid transaction fee funds.

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This entry was posted in Investing, Investing Advice, Investing Basics. Bookmark the permalink.

7 Responses to Where to Open Your Investment Account

  1. mark says:

    this is great! thanks.

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  6. mary m. crews says:

    i love to learn new stuff

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