Understanding Brokerage Accounts – Features and Benefits Explained

A brokerage account is an investment account that allows you to buy and sell a variety of investments, such as stocks, bonds, mutual funds, and ETFs. Whether you’re setting aside money for the future or saving up for a big purchase, you can use your funds whenever and however you want.

Ready to work toward your financial goals? Learn more about the benefits of a brokerage account and how it compares to other types of investment accounts.

What can you do with a brokerage account?

You can use your account to gain access to stocks and other types of investments. Opening an account is one of the first steps to building your personal investment portfolio.

  • Buy and sell stocks, mutual funds, ETFs, and other securities.
  • Take advantage of potential long-term growth.
  • Set aside money for your retirement, or other goals like college tuition or a down payment.
  • Gain access to investment research, tools, and strategies.

How is a brokerage account different from other accounts?

Brokerage account is a broad term that covers a few types of accounts. For example, a standard account offers maximum flexibility and access to a variety of investments. Learn more about how a standard account compares to other account types with our account comparison table below.

Brokerage Account  Retirement Account Checking Account
Purpose of account 
Investing
Earmarked for long term growth and retirement savings Bank account used for everyday spending
Fees 
No fees to open and maintain your account No fees to open and maintain your account No fees to open and maintain your account
Taxes 
More flexibility, based on what you sell. Must typically claim any capital gains as taxable income
Specific tax benefits, depending on the IRA you choose
There may be taxes on the interest income earned based on your checking account type
Contribution limits 
No restrictions on the dollar amount you can invest Has contribution limits, and certain eligibility requirements No restrictions on the dollar amount you can contribute
Withdrawal rules 
Take money out anytime without paying any fees Depending on IRA you choose, there are penalties if you take money out before retirement No limit to when or how often you can access your money

How do I use my brokerage account?

Many investors open a brokerage account to start saving for retirement. However, the flexibility of this type of account means you can withdraw at any time and use the funds for shorter-term goals, too, such as a new house, wedding, or big remodeling project.

Your brokerage account can help you with:

  • Trading stocks
  • Long term investing
  • Retirement savings
  • Other savings goals

What’s more, when you open a brokerage account with Schwab, you get to decide how to manage your investments. You can choose to handle your investment on your own, or take advantage of an advisor, or even explore automated investments—with Schwab, there are multiple ways to invest, so you can reach your goals according to your own plan.