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Financial Literacy for Students: Investing

Brokerage Accounts

The most common type of non-retirement investment account is known as a Brokerage Account. This type of account provides access to a broad range of investments (many of which are described below). Any interest or dividends that you earn on investments, or any funds you gain by selling investments, are subject to taxes in the year you receive the money. 

When you open a brokerage account you may be asked if you want a cash account or a margin account. A cash account is appropriate to most investors. With a cash account you buy investments with money you deposit into the account. A margin account is for investors who wish to borrow money from the broker. This type of account is best suited to advanced traders.

 

Good to Know: There are no limits to how much money you can contribute to a brokerage account, and funds can be withdrawn at any time, though you may owe taxes on any money gained. When opening an account you will also want to consider who is doing the work (you or an account manager - likely for a fee), and the level of risk you are comfortable with. 

Types of Investments and Funds

  • Stocks
    • A type of security that gives stockholders a share of ownership in a company
    • Also may be called "equities"
  • Bonds
    • A fixed-income investment that represents a loan made by an investor to a borrower, usually governmental or corporate
  • Index Funds
    • A collection of stocks (or other investments) that aim to mirror the performance of an existing market index, such as the S&P 500 Index
  • Mutual Funds
    • A portfolio of stocks, bonds, or other securities overseen by a professional fund manager
    • Trade once daily
  • ETFs (Exchange-Traded Funds)
    • A basket of securities that tracks or tries to outperform an underlying index fund
    • Can trade multiple times per day, causing fluctuations in price throughout the trading day

Where Can I Open an Account?

There are many brokerages out there. Do your research before choosing which company you would like to work with.

Below are a few:

Contact

James A. Cannavino Library

3399 North Road
Poughkeepsie, NY 12601
(845) 575-3106

In the Library