Brokerages offer bonuses to compete for your business. Set yourself up for success by selecting a broker that understands your needs. Weāve considered the best brokers based on commissions, account minimums, bonuses, and overall quality.
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A brokerage account bonus is an investment incentive to attract new clients and is a great way to save on your next account. This incentive usually comes in two forms, which are cash bonuses and free trades. You’ll need to meet certain conditions to qualify.
Cash bonuses: A cash bonus is an upfront payment made by the broker to anyone who opens an account with them. Some brokers offer higher amounts than others, but they are usually $50 to $3,500.
Free trades: Free trades usually can be used immediately or anytime in the future if needed.
Why use a brokerage account?
Here are some of the most common uses:
Buy and sell financial securities: If you want to buy or sell stocks or other securities, you can do so through your brokerage account. You’ll have access to research reports, other information about individual companies, and research tools to help you make the best decisions when investing your money.
Potential long-term growth: Opening a new brokerage account allows you to invest in the stock market to earn a long-term profit. Depending on how much risk you’re willing to take, this could involve buying shares in individual companies, investing in index funds, etc.
Investment research, tools, and strategies: When you open a brokerage bonus account with one of the major banks or online brokerages, you’ll gain access to research tools that allow you to track the performance of individual stocks over time and compare them against other investments. You’ll also have access to stock screening tools that help you determine whether an individual stock meets your criteria for purchase, such as price range.
Are brokerage accounts safe?
Brokerage accounts are safe. They are licensed, regulated, and insured financial professionals who help people manage their money and investments, such as stocks and bonds. Brokers are accredited by the Financial Industry Regulatory Authority (FINRA) and licensed to sell securities. They must also meet specific minimum net worth requirements and submit a registration fee to FINRA.
What can you invest through brokerage accounts?
You can invest in various financial securities and funds. Here are some examples:
Stocks: Stocks represent shares in a company that trades on public exchanges like the New York Stock Exchange (NYSE) or Nasdaq. You can purchase individual shares or certain kinds of pooled funds that own hundreds or thousands of shares.
Bonds: Bonds are loans from companies or governments that pay interest until they mature at a specific date (i.e., when they become due). Most bonds have fixed maturities ranging from 10 years to 30 years, but there are also floating-rate bonds that change their interest rates based on current market conditions.
Mutual funds: Mutual funds represent portfolios of stocks owned by multiple investors who pool their money together to diversify their holdings across many companies rather than just one stock or sector. The two main types of mutual funds are open-end funds and closed-end funds.
ETFs: ETFs are a good way to invest in the markets because they’re extremely diversified and low-cost. They allow you to buy into thousands of stocks, bonds, or other assets in one easy transaction.
Commodity funds: Commodity funds provide exposure to commodities such as gold, silver, oil, and gas. The value of these funds is based on the underlying commodity price.
Currency funds: Currency funds provide exposure to a specific currency pair e.g., USD/EUR. The value of these funds is based on the exchange rate between two currencies. These funds can help investors hedge against currency fluctuations or take long positions when they believe that one currency will appreciate against another.
Real estate funds: Real estate funds are a great way to gain exposure to commercial real estate without tracking individual properties. Real estate funds typically invest in a concentrated portfolio of properties. They also invest in real estate-related securities such as mortgage-backed securities, REITs, and derivatives.
Benefits of investing in funds with a brokerage account
Here are some reasons why you should consider investing in funds with a brokerage account:
Portfolio diversification and risk management: A brokerage account gives you access to a wide range of investments that can help reduce your risk exposure in your portfolio. ETFs provide access to hundreds or even thousands of securities in one trade, allowing you to diversify your portfolio in one transaction.
Lower costs: ETFs are low-cost investments because they don’t have to pay for research or salespeople. Instead, they simply replicate an index and hold all the securities. This allows them to charge lower fees than mutual funds, which have to employ people to manage portfolios and sell shares to investors.
How to choose the best brokerage account
When choosing a brokerage account, it is important to look for a bonus that will benefit you the most. Here are some things to consider:
Commissions: The best way to save money on commissions is through commission-free trading. If your broker has this feature, then you should definitely take advantage of it as much as possible. Some brokers also offer discounts on certain types of trades, such as market orders or limit orders.
Reliability: You can start by researching the reputation of the brokerage firm and its brokers. Look for reviews from other customers and any awards or recognition the company has received.
Account fees: The next important factor is any additional fees associated with your account. Some brokerages will charge a monthly fee if your balance falls below a certain level while others may charge nothing at all. You’ll want to check out both options before making your decision because paying an extra fee could drastically reduce the value of any bonus you receive.
Tools, education, and features: A good broker will offer you a variety of tools and education so that you can learn how to use their platform effectively. They should also have platforms or apps that are easy to navigate and understand.
