Brokerage Account
An investment account at a licensed broker-dealer that allows investors to buy and sell securities such as stocks, bonds, and ETFs.
What is Brokerage Account?
A brokerage account is an investment account opened at a licensed broker-dealer that allows investors to deposit funds and buy, hold, and sell a wide range of securities including stocks, bonds, ETFs, mutual funds, and options. Unlike tax-advantaged retirement accounts such as IRAs or 401(k)s, standard brokerage accounts have no contribution limits and no restrictions on withdrawals, but investment gains are subject to capital gains tax in the year realized. Brokerage accounts can be individual, joint, custodial, or institutional, and are offered by full-service brokers, discount brokers, and online platforms such as Fidelity, Charles Schwab, and Robinhood.
Example
An investor opens a taxable brokerage account at Fidelity, deposits $10,000, and purchases 50 shares of an S&P 500 ETF. Unlike a Roth IRA, there are no contribution limits, but dividends and capital gains are reported on Form 1099 and taxed each year they are realized.
Source: FINRA — Brokerage Accounts