investing

How do I: Open an account online?

Topic: CDs AND INVESTMENTS
Who is affected: CONSUMERS AT EVERY LIFE STAGE
DEGREE OF DIFFICULTY: EASY
What you'll need: SOCIAL SECURITY NUMBER, DRIVER'S LICENSE, BANK STATEMENT, BENEFICIARY INFORMATION

What you need to know

Opening a brokerage or CD account online isn't much different from doing so over the phone or in person.

Either way, you'll still need the following information:

  • Social Security number.
  • Driver's license number.
  • Banking information (for the institution you plan to transfer cash from to fund the account).
  • Social Security numbers and information for any beneficiaries.

After you assemble this information, it's time to do a little research on prospective institutions. If it's a CD account, choosing the institution is pretty easy. There are basically three questions to consider:

  • Is the yield competitive?
  • Is the bank FDIC-insured?
  • Can I get to my money easily if I need it?

If you can answer yes to all, you've found the institution for you.

If it's a brokerage or retirement account you're after, fees are the key thing to consider. A few dollars difference in commissions, maintenance fees and the like may not seem important, but over time fees can kill your returns.

Also, most institutions require a minimum amount to invest, initially. A few will waive this requirement if you agree to set up a regular direct deposit.

Lastly, no matter the type of account, don't forget to look around the prospective institution's Web site before pulling the trigger. Ease of use can be a serious issue with online banking, and you want to make sure the Web site is well-designed and easy to use, with support available if you need it.

Step-by-step
1.Go to your chosen institution's Web site. Most will have an "Open an Account" link on their homepage.
2.Choose your account type.
3.Enter your name, e-mail address, address, Social Security number and other requested information.
4.Specify details of your account, such as how dividends and other investment income will be distributed.
5.Elect how you'll fund the account (i.e., mailing in a check, setting up an electronic transfer from your bank).
6.Verify your identity. Institutions have different ways of doing this -- it may consist of confirming a deposit amount into your linked bank account, answering a series of questions about yourself, and/or printing, signing and mailing in forms.
Investing online can have one major drawback: The tendency to want to keep constant tabs on the day-to-day fluctuations of your portfolio and react accordingly. Resist this temptation by adopting the strategy of dollar-cost averaging, which spreads out investments over a pre-determined schedule so you can take the emotion out of your investing decisions.

 

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