Brokerage Account

Loading the player...

What is a 'Brokerage Account'

A brokerage account is an arrangement between an investor and a licensed brokerage firm that allows the investor to deposit funds with the firm and place investment orders through the brokerage, which then carries out the transactions on the investor's behalf. The investor owns the assets contained in the brokerage account and must usually claim as income any capital gains he or she incurs from the account.

BREAKING DOWN 'Brokerage Account'

There are several different types of brokerage accounts and brokerage firms; investors are able to choose the type of brokerage account and broker that best suits their financial requirements. Some full-service brokers provide extensive investment advice, charging high fees for their efforts, while most online brokers simply provide a secure interface through which investors can place trade orders and, therefore, charge relatively low fees for their services. Brokerage accounts can also differ in terms of order execution speed, analysis tools used, scope of tradable assets, and the extent to which investors can trade on margin.

RELATED TERMS
  1. Full-Service Broker

    A broker that provides a large variety of services to its clients, ...
  2. Account

    1. An arrangement by which an organization accepts a customer's ...
  3. Broker

    1. An individual or firm that charges a fee or commission for ...
  4. Suspense Account

    In accounting, the section of a company's books where unclassified ...
  5. Financial Supermarket

    An institution or company that offers a wide range of financial ...
  6. Margin Account

    A brokerage account in which the broker lends the customer cash ...
Related Articles
  1. Mutual Funds & ETFs

    FMAGX: Overview of Fidelity Magellan Fund

    Analyze the Fidelity Magellan Fund, including its investment philosophy, performance history and manager biographies.
  2. Mutual Funds & ETFs

    Buying Vanguard Mutual Funds Vs. ETFs

    Learn about the differences between Vanguard's mutual fund and ETF products, and discover which may be more appropriate for investors.
  3. Retirement

    Best Ways to Save For Retirement Without an IRA or 401(k)

    Learn the most common types of savings vehicles used to accumulate money for retirement outside employer-sponsored 401(k)s or IRA accounts.
  4. Investing Basics

    What's a Brokerage Account?

    A brokerage account is a contractual arrangement between an investor and a licensed securities broker or brokerage.
  5. Investing Basics

    Picking Your First Broker

    If you're a rookie investor, your first big investment decision should be an informed one.
  6. Brokers

    Brokerage Functions: Underwriting And Agency Roles

    Learning about these various activities can give insight into how securities are issued and traded.
  7. Mutual Funds & ETFs

    How To Include ETFs In A Client's 401(k)

    Learn how ETFs can solve an advisor's litigation and fee disclosure fears.
  8. Options & Futures

    The 4 Ways To Buy And Sell Securities

    Know the four main avenues of buying and selling investment instruments.
  9. Options & Futures

    Don't Let Brokerage Fees Undermine Your Returns

    Smart investors don't give away more money than necessary in commissions and fees. Find out how to save.
  10. Entrepreneurship

    Tips For Boosting Your Business

    Find out how butter up new clients, build up old files and better your bottom line.
RELATED FAQS
  1. Is a money market account the same as a money market fund?

    Discover the differences between money market accounts and money market funds, including minimum balance requirements, withdrawal ... Read Answer >>
  2. What is the smallest amount of shares I can buy?

    Understand the steps needed for an investor to open a brokerage account and make a trade. Learn what the smallest amount ... Read Answer >>
  3. How are Registered Retirement Saving Plans (RRSPs) taxed?

    Learn about registered retirement saving plans, and find out how the Government of Canada provides tax benefits for those ... Read Answer >>
  4. What is the "three-legged stool"?

    The "three-legged stool" was a retirement terminology from the past that many financial planners used to describe the three ... Read Answer >>
  5. What are some of the disadvantages to taking venture capital?

    Learn how financing a business through venture capital can be a viable source of funding for small businesses but know caveats ... Read Answer >>
  6. Is the upfront cost of Class A mutual fund shares worth it?

    Learn about the differences between mutual fund share classes, and discover under what circumstances the Class A shares make ... Read Answer >>
Hot Definitions
  1. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  2. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  3. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
  4. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
  5. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
  6. Economies Of Scale

    Economies of scale is the cost advantage that arises with increased output of a product. Economies of scale arise because ...
Trading Center