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A brokerage account is when an investor has account at a licensed brokerage firm. It enables the investor to deposit money and place investments.
Types of Brokerage Account
There are several different types of brokerage accounts: cash-management account, margin account, and discretionary account
Cash-management Account
This is the most basic type of brokerage account. Investors put money into these accounts to make trades. Cash-management accounts are great substitutes for banking accounts.
Margin Accounts
Margin accounts allow the investors to buy securities with the funds borrowed from the broker. Margin loan fees charge rather low interest rates to encourage investors to buy on margin.
Discretionary Account
With this account, the broker buys and sells shares without directly contacting the investor for approval.
Assets
Assets gained through the brokerage account are all owned by the investor.
Source:
AG.NY.gov: Office of the Attorney General Investor Protection Bureau: Brokerage Account
More Information:
OAG Investment Protection Bureau: Information for Brokers, Dealers and Salespersons
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