Before you can start buying stocks for the first time, you need to open a broker account. Its the first and most important step you make in your investing career because many people never even get that far! It is always easier to do nothing and investing in stocks does take time and can be a bit intimidating. Saving enough money (I’d recommend at least $2000) and then actually opening an account can be a big deal.
I’m Using TD Ameritrade
In conjunction with this blog, I’ve opened an account with TD Ameritrade as they consistently rank near the top in Barron’s yearly review of online discount brokers. I wanted a broker that would be good for my long term investing goals and one I could confidently recommend to my readers. Click the chart for a readable picture size of Barron’s 2013 online broker rankings:
They charge $9.95 per trade which I think is a reasonable price for the service and platform. You can get lower pricing with some other brokers but honestly, if you are stressing over a couple of dollars per trade you are focusing on the wrong thing. Please take a look at my more in depth TD Ameritrade review.
Open An Online Discount Broker Account
Opening an online stock account with any broker will take about 15 minutes to a half an hour. In my example I am using TD Ameritrade but any broker you choose should be very similar. You will need to give your real name, address, phone number, Social Security Number, and answer a handful of questions. The questions regarding your job, income, net worth etc. have to be filled in but you don’t have to be truthful about those if you don’t like (I elaborate more about that in the video below).
Your SSN is necessary because all brokers are required to supply information to the IRS at year’s end that should match your tax return. The IRS doesn’t want you cheating on your taxes and so they have made it the law that all stock brokerages must report the buy and sell information you compile during each year. Please watch my short video that shows most of the new account sign up process with TD Ameritrade:
Funding My Stock Account
For funding I chose to send TD Ameritrade a personal check through the US mail to the address they specified and it was in my account in 3 business days. Quite impressive! However, most people would likely choose the electronic transfer of funds from a bank account into their new stock account. Electronic transfer should make the funds visible and available the next business day I would think.
I did get a $300 bonus for funding the account with $150,000 along with 500 free trades that are good for 60 days. You can also see that when you first open an account all your money will be listed under “Cash balance” until you buy your first stock:
Obviously, it is unlikely you will be investing as much as I did so the bonus you will be eligible for will be less. You get 60 days of free trading for funding with anything less than $25,000 and then you get an additional cash bonus if you deposit $25,000 or more. Most brokers will give you the same exact bonuses TD Ameritrade gives which you can see below: