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Lesson 9. Opening a Brokerage Account > Getting Started - Pg. 46

46 Chapter 9. Opening a Brokerage Account In this lesson you will learn about the various types of brokerage accounts that are available and the differences in how they operate. Getting Started Opening a brokerage account is a relatively simple procedure. On average, most brokerage firms will open an account for about $2,500. However, as this is an average, the initial amount may vary. Many brokerages offer accounts at various levels with a number of enticements to make the investor open the account with as much money as possible. Open an account at $10,000 and you get a toaster. Open an account with $100,000 and someone from the brokerage will come to your house to make the toast. See how that works? In all seriousness, the fight for new investors is fierce and you can make out as the various brokers battle for your business. Most e-brokers are currently offering everything from reduced trade prices to outright free trades for an extended period of time, a year for example, if you commit to keeping your account with them. Whether you open an account online, by telephone, or in person, be sure and ask what kind of perks are available or you might miss out on a great deal. In addition, regardless of what type of broker you will be using, it's probably a pretty good idea to get information on a couple of different ones before making your decision. Any legitimate broker will be happy to give you almost any type of information or reference you wish to see. Not all brokerages require such large initial deposits when opening new accounts. To most people, $2,500 is an astronomical sum, and that's not so strange. The average person simply doesn't have $2,500 lying around the house not being otherwise used. A number of brokerages do allow smaller initial investment amounts of $1,000 or even $500. In addition, many brokerages will allow you to open an account with a small amount if you agree to systematic deposits. This is a great way to build up a brokerage account by opening the account with a minimum amount, often as low as $50 or $100, and investing that same amount each month. All you need to do is forward your bank account number and a signed authorization and that set amount will be automatically deducted on the same day each month. Note A systematic deposit is a predetermined amount that is regularly deposited to an account. For example, every month on payday you send $50 to your account. This service is offered by almost any broker. Finally, many brokerage houses run sales. I'm not making this up. The competition for investors has become so fierce in the last couple of years that brokerage houses will allow clients to open accounts with amounts substantially below their normal minimum limits. After all, it's in the brokerage's best interests to hold $200 of an investor's money rather than nothing at all.