Due to the risks of the stock market, misleading marketing tactics and complicated financial lingo, investing can be a little intimidating for beginners. However, setting up an investment account is no more difficult than opening a checking account. Here's how:
Instructions
Setting up an Investment Account
1. Decide what investments you want to buy. There are thousands of different stocks, bonds and mutual funds, and you want to open your account at an institution that offers the investments you want, with the lowest fees and expenses. If you know you want to invest in Fidelity mutual funds, buying directly from Fidelity will save you money on fees. If you want to invest in individual stocks, look for a brokerage house or online broker that offers low-cost or free trades and low or no fees.
2. A regular investment account has few restrictions, but there are no tax breaks or special tax treatments available. If you are interested in investing for retirement, consider opening a traditional or Roth Individual Retirement Account. These accounts have income and contribution limits and strict rules governing withdrawals. However, they receive special tax treatments that can benefit you in the long run.
3. Once you have chosen an institution, go to its website and and open an online investment account. Some institutions will ask you to choose which investments you'll be buying right away. For instance, at Vanguard, each individual mutual fund you wish to buy has a separate account number.
4. During the application process, most institutions will ask that you link an existing checking account to your investment account. Considering the lag time in transferring money, though, consider opening a money market account at the same institution as your investment account so that you can purchase stocks at a moment's notice.
5. If you prefer not to open the account online, most institutions will allow you to print an application and mail it to them.
