A brokerage account is the account that is opened up between an investor and a brokerage firm. The brokerage account is the venue through which all the transactions are done. What this means is the account is the housing area for money that is deposited into it. From there, this money can be used to purchase stocks, bonds, or invest in other similar endeavors.
When there is money made on an investment, it goes directly into the brokerage account. The money accumulated in that account can be used for more investments or it can remain in the account.
Brokerage accounts can be acquired through traditional or discount brokerages. In a traditional brokerage, there is a broker that is assigned to manage one’s account. This individual is told what stocks and bonds to invest in. Furthermore, they can also offer advice regarding the types of investments which would work best and are the most lucrative at the moment.
The discount brokerages have accounts in which the money can be deposited and used for trades and investments. However, there is little to no advising done by the brokers at this type of firm. Instead, the client is the individual who has to do all of the investment research and make investment decisions based on what they have researched and acquired.
Brokerage accounts require a minimum investment to be made in order to sustain the opening of the account. This is not unlike bank accounts and various other types of financial investments. A brokerage account often requires anywhere between $500 to over $1,000 at a minimum. However, there are specific types of accounts that require much less; it is a matter of the brokerage firm and the type of brokerage account desired.