Brokerage account

A brokerage account is the account you open with a broker or investment platform in order to trade and hold investments. You deposit cash, place orders to buy or sell securities, and the firm executes those orders on an exchange or with a market maker, then records what you own. The securities are usually held by a custodian on behalf of clients, separate from the firm’s own assets. Accounts come in different wrappers: an ordinary taxable account, or tax-advantaged versions such as an ISA or SIPP in the UK or an IRA in the US.

What you pay and how well you are protected depend on the account. Costs can include dealing commissions, currency conversion fees, platform or custody fees and the bid-ask spread, and these compound over time just as returns do. Many countries have an investor compensation scheme that steps in, up to a limit, if the firm fails and client assets are missing, but none covers falls in the value of your investments. A cash account lets you invest only money you have deposited; a margin account lets you borrow against your holdings, which adds leverage and means losses can exceed the money you put in.