How Do I Open an Investment Account? -Things You Can Do Tomorrow

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How Do I Open an Investment Account?

On this blog we attempt to cover the full range of financial planning topics. We often talk about the importance of saving and investing, but sometimes the advice “go invest” is still daunting and vague.

There are several good options if you want to open a small investment account[1]. It is better to start small and grow slowly into a larger account with more investments than to wait until you have “enough money to be ready” to begin investing.

Sometimes what stops someone from following advice is just not knowing where to begin or how easy it is. Many personal financial advisors have minimums, so where do you start if you only have a small amount of money to invest?

Here are several companies with whom you can open a relatively small, self-directed brokerage account with no maintenance fees[2]– perfect for getting started:

  • Vanguard has no minimum to open an account; the charge for investing depends on what you are purchasing. If you have the amount of money needed to purchase the fund or ETF you want (plus commission), then you are ready to invest! Many of the mutual funds have a minimum $1,000 investment (because of the underlying things the funds invest in, not necessarily because of a Vanguard or brokerage company’s restriction). However, with Vanguard if you buy some Vanguard ETFs there are no transaction costs[3], and there are low costs[4] for Vanguard mutual funds.
  • Scottrade has a minimum opening account balance of $500, and they charge $7.00 on trades.
  • Fidelity has no minimum amount or balance requirements on their Cash Management Account, but if you’d like to invest, the minimum for a Fidelity Account is $2,500. They charge $7.95 on trades.
  • TD Ameritrade has no minimums to open an account, and charge $9.99 for trades.
  • E-Trade has a $500 minimum opening account balance, and charge $9.99 on trades.
  • Charles Schwab has a minimum account opening balance requirement of $1,000 and charge $8.95 for trades. They have Schwab ETFs you can purchase for no additional brokerage commission.

Minimums and trading charges can and do change, so verify these before you make your final decision.

Six choices may still seem like a lot, but I encourage you to just pick one and go with it – it is better to begin than not start at all! All of these companies have online tools for opening accounts and purchasing securities, a crucial consideration in the 21st century. Stay tuned for suggestions of what to buy once you’ve set up your account.


[1] An investment account, more commonly known as a brokerage account, is an account opened with a brokerage company with the ability to buy and sell securities (“security” is the technical term for things like stocks and bonds). You tell the brokerage company what you want to purchase or sell, and they complete that transaction for you.

[2] For a brokerage account, especially a small one, look for companies that do not charge account maintenance fees. Fees take away from the amount you have to invest for yourself.

[3] Be sure to look for companies that have low charges on trades, often called trading costs or fees. It usually costs something to trade, because you have to pay someone to be the middleman instead of walking into an exchange and trading. Brokers have to make money somehow. But the more you pay in trading fees and other expenses, the smaller the amount you have to invest for yourself.

[4] Before purchasing a security or fund (a fund is a collection of securities, often with some attribute in common), check for a low expense ratio. Expense ratios are the measure of operating costs to keep the fund going. Again, the manager of the fund has to make money somehow, but you don’t want to pay his entire salary out of your potential earnings through owning a piece of the fund.

Photo of New York City Skyscraper by Kevin Jarrett used under the Flickr Creative Commons license.

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Wealth Manager

Austin Fey is a Wealth Manager at Marotta Wealth Management, specializing in charitable giving and asset allocations. She is a regular contributor to our Marotta On Money articles, often giving advice to those just getting started in finance.

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