A brokerage account is a financial arrangement in which an investor deposits funds with a licensed brokerage firm. The brokerage firm then uses these funds to execute various types of financial transactions on behalf of the customer. These transactions can include buying and selling stocks, bonds, mutual funds, exchange-traded funds (ETFs), and other investment products.
Brokerage accounts can be opened with traditional full-service brokerage firms or online discount brokerages, each offering different levels of service and cost structures. The choice of brokerage account depends on an investor’s financial goals, trading preferences, and the level of support and guidance they require in managing their investments.