How Do Brokerage Accounts Work?

by Andie Francese ; Updated July 27, 2017

The Basics

Brokerage accounts are basically bank accounts that are used for the purpose of investing in stocks, bonds and mutual funds. The accounts are opened either in person or on the Internet, depending on the banking institution, and the account holder can invest in stocks and bonds directly from her account. A professional broker takes the requests and invests the money as the account holder has requested.

Money Transfers

Many online brokerage accounts offer customers the ability to transfer money into their accounts via a checking account. The money can be transferred electronically or by bank wire. Once transferred, the money is available for investing. Traditional brokerage accounts can be funded just as a normal bank account would be.

Comission

They money placed into a brokerage account can be used to buy stocks and pay the commission of the professional working for you. Commissions are calculated in one of two ways. The broker can calculate a commission from a percentage of the overall sale--2 percent to 5 percent--or a flat rate fee ranging from $5 to $100, again depending on the investments.

About the Author

Andrea "Andie" Francese. She worked as an entertainment editor, blogger and managing editor for the Mercy College "Impact" starting in 2006. Francese won 2 Quill Awards for her work on the "Impact" including Excellence in Journalism and Enterprise Journalism. She currently works for several blogging sites. Francese holds a Bachelor of Arts in psychology with a minor in media studies at Mercy College.