What You Need to Open a Stock Brokerage Account

If you have an account with a brokerage firm, you can buy and sell stocks, bonds, options and other securities. To protect investors and brokers, government agencies set requirements for the various kinds of brokerage accounts. To open an account, you’ll have to supply some specific documents and personal information along with an initial deposit.

Basic Requirements

Brokerage firms ask for some personal information to comply with government agency rules. You must provide your Social Security number so earnings can be reported to the Internal Revenue Service. You’ll also need a valid government-issued ID, such as a driver’s license or passport. Because brokers typically provide investing advice, they need to know your employment situation, income, net worth and investment goals.

Margin Accounts

Brokerage accounts can be either cash accounts or margin loan accounts. With a cash account, you must deposit sufficient funds for any stock purchase. Margin accounts allow you to borrow some of the money from your broker. Since the brokerage firm is lending you money, you need a good credit rating. In addition, you must sign a margin agreement that makes everything in your account collateral for money that you borrow.

Deposit Requirements

You will need an initial deposit to open a brokerage account. Typically, brokerage firms ask for around $1,000, but some require as much as $2,500. However, if you open the account as a Roth IRA or other retirement account, the broker may reduce or waive the initial deposit requirement. Some online brokers also require no deposit or a very small deposit. For a margin account, you are likely to need more. The Financial Industry Regulatory Authority says you must have a minimum balance of $2,000 or 100 percent of the stock value -- whichever is less -- to make a margin trade. If you frequently buy and sell the same stock on the same day, you may be classified as a day pattern trader. In that case, government rules require a minimum balance of $25,000.


Funds in a brokerage account are not insured like bank deposits. When you buy stocks, you accept some risk of losing money. A Forbes.com article reported that Charles Rotblut, vice president of the American Association of Individual Investors, recommends setting aside six months' to a year’s wages before you open a brokerage account. To protect yourself and avoid costly errors, be sure to read your brokerage account agreement, margin agreement and other documents related to your stock brokerage account. Ask the broker to clarify anything you aren’t sure of.