The idea of investing in a brokerage account may seem intimidating at first, but it's actually quite simple. A brokerage account is an account you can use to purchase and hold investments, such as stocks, bonds, exchange traded funds (ETFs) and mutual funds. Retirement investors who invest some 401(k) Retirement assets through a self-directed Charles Schwab brokerage account saw their average annual return between 2014 and 2018 was 10.4%.
For those who are just starting out and don't have a lot of money to invest, consider opening a brokerage account that allows you to buy fractional shares. Fractional shares are pieces of a company's stock that are smaller than one full share. For example, if a share of a company is trading for $200, you could buy a fractional share of $20 instead of the full share. This is a great way to start investing without having to invest a lot of money. Check out our picks for best stock brokers for 2022. There's a lot to consider when picking a brokerage, so make sure you look at the fees, account minimums, and research tools they offer.
Many brokerages these days have waived fees on individual stock trades. And a lot of brokerage accounts no longer impose fees for inactivity. If you plan on investing in a brokerage account, make sure you understand the fees and what type of account you need. It's also important to understand the different types of investments that are available to you. All investments come with some degree of risk, so it's important to understand the risk and rewards before investing.