What Are Brokerage Accounts?
Licensed brokerage firms offer an account (or arrangement) between the firm and the investor that permits the investor to deposit funds with the firm, place orders and then the brokerage carries out the transactions requested by the investor.
Two examples of some investments are mutual funds, and bonds. The investor generally must claim any income due to capital gains and usually there is a minimum amount of money that a firm requires to open an account.
There are different types of brokerages and the two most common are either full-service, which provides a greater range of services and offers financial advice, (as well as charging a higher commission rate), and discount or online brokerage companies that are better suited to the investor that makes decisions on their own without advice from a broker.
A specific account called a margin account allows an investor to buy securities with money that has been borrowed from the broker. A discretionary account allows the broker to buy and sell shares for the investor without prior approval from the investor.