Purse Strings
How do you see your money? A mess of credit and debit cards, cash under the mattress, and a few physical checks. A bank account with a monthly cost and a wee bit of interest?
Simple, convenient, low-cost mechanisms for managing life's transactions = good personal finance.
Too few individuals and households have a brokerage account. I get the reluctance.
A common question: “How much does it cost to set up a brokerage account?” You don’t need to have a high income or be wealthy. Just normal.
Another: “How do I set up a brokerage account?”
A brokerage account is the one account you must have, as long as the account provides the following services:
As an associated cash management account with a debit card
Free or reimbursed ATM withdrawals
Interest earnings on cash balances
Check writing
Bill pay capability
A great app through which you can deposit a physical check by taking its picture and make changes to investment holdings in savings accounts by exercising a buy or sell trade. (At a $0 trade cost)
Households receive utility from cash and checks, and a bank checking account can handle most transaction needs. A cash management account tied to a brokerage account links how we execute our spending with savings and investment choices under a single platform. In the past, I have made the case for the importance of a brokerage account with a cash management feature, and my response to the questions investment companies will ask.
Today, I am giving you an application walk-through at Schwab. A brokerage account at Fidelity, a brokerage account at Vanguard, and others will follow a similar approach. Please share if you know others who would benefit.
The site.
I will set up an individual account, and clicking Individual Brokerage takes me to this image (the orange arrows are mine).
Setting Up the Account
Off to a communication authorization and a security check.
Create your login credentials.
The basic stuff.
A trusted contact. Always a good idea.
I always feel this type of information gathering is more about future investment company marketing than me……but, I gave them a bone.
A couple questions to answer for Schwab to comply with financial regulations.
Answers to: “Why these questions matter.”
Back to the needs and interests of the account applicant.
One last set of choices, and I would answer no to each of them.
Borrowing money to invest is a why to ratch up the risk of your investments. Trading options is a way to manage risk or speculate and take more risk. A class in options and the opinion of an investment company advisor should be after the account opening. Lastly, a trading platform for daily or frequent trading is, in my opinion, bad personal finance.
And, that is it!
Edit if you need to.
Test how a brokerage account works for you. Let me know how it goes.