Brokerage Account

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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.

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