Once you have a chunk of money saved that you won’t be needing for your expenses, emergency fund or retirement, you can open an investment account, which is also known as a brokerage account. I use Charles Schwab because that’s what my company uses for all its employees and clients.
Instead of just using what I have, you should do some comparison shopping. Comparing brokerage firms is kind of like comparing banks (Bank of America, Chase, Wells Fargo, etc.). There are several factors to consider like minimums, fees and customer service.
NerdWallet does a great job of pinpointing what you should look for in a brokerage firm if this is your first time investing:
- Commission-free mutual funds and ETFs with low expense ratios
- Customer service (with access to brick and mortar branches)
- Easy-to-use online interface
- Low account minimums and no account inactivity fees
They ranked TD Ameritrade as best broker, especially for first-time investors.
I found a great comparison chart on The Motley Fool. Just taking a quick look at the chart shows me that TD Ameritrade might in fact be the best option since it has lower minimum requirements than the other firms.
Once you select a firm, I recommend going to a physical branch and opening your account with a representative. They will help you set up the account, transfer your money over and you can ask them any questions you have.
The next step in the investing process is selecting stocks and/or mutual funds to invest in, which I will cover in the next few posts.