Overall, opening an account takes about 15min or less online. Most brokerages require us to be at least 18 years old; however, some brokers now allow teenage investors to open an account before they are 18 if their parents already have a brokerage account with them.
Collecting this information is necessary for brokerages to comply with FINRA regulations, and we should be ready to provide it.
The required information includes:
- Social Security Number (often a picture of your Social Security Card is required)
- Drivers license / State Id/ Passport
- Bank account statement or other proof of fund and address
- Proof of Permanent Residency Card (if you are not a US citizen)
- Employment status including annual income and net worth and if you work for another brokerage
- Are you or a family member a senior executive, or 10% shareholder at a public company
- Are you or a family member a current or formerly politically exposed person or public official
Connect a bank account
Many modern brokerages will use software to make it easy and convenient to connect directly to our bank accounts.
Regulations place limits on how quickly the money deposited from a bank account into a brokerage account can then be withdrawn money into a different bank account. This is to prevent criminals from laundering money by moving cash through brokerage accounts.
Certain brokerages have their own restrictions.
For example, some might require us to keep newly deposited cash in the brokerage account for 60 days before we can transfer it into a different bank account. Keep this in mind if we plan on funding a brokerage account with multiple bank accounts.
Minimal deposit amount
Certain brokerages require minimal deposit amounts. Most of the time, these amounts are small and many brokerages don't require any money to open an account. However, there are some firms that cater to wealthy folks that require minimum investments of over $100K!
To be compliant with KYC and AML requirements, brokerages will need a few days to approve your account. This means you won't be able to invest on the same day you decide to open an account. Get a head start by opening an account sooner rather than later.