Investing is a good way to grow your money. But being new to investing makes what’s already new, even more unclear and stressful. Thankfully, there are online brokerage accounts that make things a little easier to get started.
A brokerage account is an account used to buy stocks, mutual funds, exchange-traded funds, bonds or other investments.
Here’s are the different types of brokerage accounts available:
- Common Stocks: This is representative of ownership in a business
- Preferred Stocks: These are paybacks higher than usual dividends.
- Bonds: This includes U.S. Treasury securities, savings bonds, corporate bonds, and so forth.
- Real Estate Investment Trusts: (REITs) Represent groups of real-estate or real-estate-related assets. Some can include specialty types of real-estate such s hotel REITs which are targeted towards owning and operating hotels.
- Money Markets and Certificates of Deposit: Money markets can either represent ownership in highly liquid mutual funds that hold cash and fixed-income investments. Or, loans people make to banks in exchange for a fixed rate of interest.
- Mutual Funds: Investment portfolios that are owned by several small investors who buy shares in the portfolio. Instead of buying and trading throughout the day, all orders are placed at the end of the day all at once. An example of a mutual fund would include index funds.
- Exchange-Traded Funds: Also known as ETFs, are a type of security that closely resembles mutual funds. ETFs are listed on exchanges and can be traded like stocks.
- Master Limited Partnerships: Or MLPs-these are complex partnerships with a tax advantage, but have several high-risk tax consequences.
So how do you know which brokerage to choose?
Keep in mind that each broker will offer different services and charge varying fees and rates, offer different perks and pass on specific benefits.