For a guide to asset allocation, diversification, and building your first investment portfolio, see the Portfolio Basics hub.
Before you open a brokerage account, decide which account type you need (IRA first, then taxable), compare the top brokerages, and understand what fees you’ll actually pay. The wrong choice can cost you thousands in fees over time.
6 Things to Check Before Opening
#
Check This
Why It Matters
1
Max out tax-advantaged accounts first
IRA and 401(k) growth is tax-free or tax-deferred
2
Compare fees and commissions
$0 commissions are standard, but fund expense ratios vary
3
Check available investment options
Make sure your preferred funds and ETFs are available
4
Review account minimums
Most major brokerages now require $0
5
Understand the tax implications
Taxable accounts require annual tax reporting
6
Check SIPC and additional insurance coverage
Protects your assets if the brokerage fails
Top Brokerages Compared
Feature
Fidelity
Charles Schwab
Vanguard
Stock/ETF commissions
$0
$0
$0
Account minimum
$0
$0
$0
Mutual fund minimum
$0 (Fidelity funds)
$0 (Schwab funds)
$1,000-$3,000 (Vanguard funds)
Fractional shares
✅ Yes
✅ Yes
❌ ETFs only through reinvestment
Research and education
Excellent
Excellent
Good
Mobile app
Excellent
Excellent
Good
Customer service
Phone, chat, 200+ branches
Phone, chat, 300+ branches
Phone, chat
Index fund expense ratios
0.015-0.05%
0.02-0.05%
0.03-0.07%
Account Type Decision Tree
Situation
Account to Open
Employer offers 401(k) with match
401(k) first (up to match)
Under Roth IRA income limits
Roth IRA ($7,000/year)
Over Roth income limits
Backdoor Roth IRA or Traditional IRA
Maxed out IRA and 401(k)
Taxable brokerage account
Saving for a goal in 5+ years
Taxable brokerage (no withdrawal restrictions)
Have a high-deductible health plan
HSA (triple tax advantage)
Taxable vs. Tax-Advantaged Accounts
Feature
Taxable Brokerage
Roth IRA
Traditional IRA / 401(k)
Contribution limit
None
$7,000/year
$7,000 (IRA) / $23,500 (401k)
Tax on contributions
Already taxed
After-tax
Pre-tax (deductible)
Tax on growth
Capital gains tax each year
Tax-free
Tax-deferred
Tax on withdrawals
Capital gains tax
Tax-free (after 59½)
Ordinary income tax
Early withdrawal penalty
None
Earnings: 10% before 59½
10% before 59½
Required minimum distributions
None
None (Roth IRA)
Yes, starting at 73
Fees That Actually Matter
Fee Type
What to Watch For
Stock/ETF trading commissions
Should be $0 at any major brokerage
Mutual fund expense ratios
Low-cost index funds: 0.03-0.10%; avoid funds above 0.50%
Account maintenance fees
Should be $0 at major brokerages
Inactivity fees
Rare at major brokerages; common at smaller ones
Transfer-out fee
$50-$75 (ACAT fee) if you move to another brokerage
Advisory/robo-advisor fees
0.25-0.35% for robo-advisors; 0.50-1.0% for human advisors
Margin interest
Only if you borrow to invest (not recommended for beginners)
What You Need to Open an Account
Requirement
Details
Government-issued ID
Driver’s license, passport, or state ID
Social Security number
Required for tax reporting
Employment information
Employer name and address
Funding source
Bank account for initial deposit (or ongoing transfers)
Beneficiary information
Who inherits the account
The Bottom Line
Opening a brokerage account takes about 15 minutes at Fidelity, Schwab, or Vanguard — all three are excellent choices with $0 commissions and low-cost index funds. Before you open a taxable account, make sure you’ve maxed out tax-advantaged options first (401(k) match, Roth IRA). The most important decision isn’t which brokerage — it’s starting early and investing consistently in low-cost index funds.
WealthVieu researches and writes data-driven personal finance guides using primary sources including the IRS, Bureau of Labor Statistics, Federal Reserve, and Census Bureau.
The content on Wealthvieu is for informational purposes only and should not be considered financial, tax, or investment advice. Consult a qualified professional before making financial decisions. Full disclaimer · Editorial policy
