What is a Brokerage Account?
Sometimes referred to as a general investment account or a taxable investment account, a brokerage account allows you to buy & sell investments, such as stocks, bonds, exchange traded funds (ETFs), mutual funds, & specialty investments. These accounts do not receive any special IRS tax-advantage like in individual retirement accounts (IRAs), 403(b)s, 401(k)s, Roth accounts, or college savings plans. Rather, brokerage accounts are funded with money that has already been taxed & the investment growth earned each year is taxable as well. However, there are no restrictions to when or what account funds can be used for.
Because of this, brokerage accounts are very customizable, & can be a good fit for a multitude of different types of investors, including but not limited to: investors who want to invest money that would otherwise just be sitting in the bank or earning very low interest; investors who want to save for a specific future purchase (like a boat or a house); or investors who want exposure to specific investments to improve their overall investment portfolio.