Getting Started
What's Needed to Open an Investment Account
1. A social security number - your annual tax documentation will be tied to this personal identifier
2. A checking or savings account where the money will be transferred from to buy stocks
3. Enough saved to meet the minimum requirement of the investment of your choice, some have none
What to Expect when Setting Up a Brokerage Account
1. Setup account with personal brokerage by selecting the account type
2. Link and verify personal banking account to your newly created investment account
3. Transfer funds into a holding or settlement account from your bank
4. Two step process: Funds your brokerage settlement account, then buy investments such as stocks or index funds
5. Set up auto-investment schedule with an amount and how often to put money in (this is optional & highly encouraged)
6. Have sufficient checking account balance to cover monthly living expenses plus auto investing amount
7. Periodically check balance to monitor accounts (intended to be held for the long term)
When Ready, Begin Investing with 3 Simple Steps
1. Open Investing Account
Select trusted brokerage platform to open new investment account. Okay to open now and put money in later
2. Fund account from Bank
Link a banking account with the new investment or brokerage account. Then transfer money in to buy shares of funds
3. Buy shares from Account
From the new investment account, choose a stock or fund (groups of stocks) and input ticker symbol to buy with cash
Use Established Brokerages and Manage Tax Impacts
Brokerage accounts are used for investing. With one open and funded, you can buy and sell stocks, bonds, funds, and other investments through a personal brokerage firm of your choice.
Use an established brokerage with an intuitive interface that you like. When selecting, look for simple account creation, easy navigation to trade and quick access to expert customer support.
Top personal brokerages: Vanguard, Charles Schwab & Fidelity
Understand impacts of investing pre or post tax money. Tax Advantaged Accounts(Roth) funded with post tax dollars grows tax free while Traditional 401(k) funds are taxed upon withdrawal.
Common tax considerations are asset location, length of time investments are held and tax-loss harvesting. Investment type dictates when taxes are paid. Pay cap gains on long term & income tax on short term profits. Dividends taxed as income.
Reduce tax: leverage Roth accounts to buy dividend paying funds
Buy What You Know
Invest ONLY in What you know
Invest, or lend money to entities with product values you understand
Stock: partial ownership of a company; pays investor with cash dividend or growth in price
Bond: lend money to corporate or governmental borrower; pays interest regularly
Mutual Fund: managed invest option that pools investors' money to buy a specific group of stocks; pays dividend or price growth