The Basics: Setting Up An Investment Account

There are many different investment brokerage options out there to choose from. They have varying fee schedules, investment options, investor tools, and levels of customer service. You should do your own research and decide which broker is best for you. My brokerage of choice is Vanguard. They are very low cost, have all the investment options I need and are known to provide great customer service. You can’t really go wrong with Vanguard, in my opinion. We’ll be using Vanguard in the examples below.

Step #1
Go to Vanguard.com select “Personal Investor”, then select “Go To The Site”.

Step #2
Select “Open An Account” at the top of the webpage.

Step #3
Select “Open a new account”.

Step #4
Select “Check or transfer from my bank or another Vanguard account”, then "Continue".

Step #5
Select “No” (unless you are already registered with Vanguard; in that case, you'd select "Yes"), then "Continue".

Step #6
Read the information on the page, then "Continue".

Step #7
For this step, you will select an investment account type.

If you don’t currently have an IRA I’d recommend starting one now. For a beginner, I’d suggest a Roth IRA. As you learn more about maximizing your investments you may find that a different account is better suited to your needs, but a Roth IRA is a great account to start with.

If you’ve already maxed out your IRA contribution for the year you can select one of the General Savings account options.

Select your account type, then "Continue".

Step #8
Enter the required information on the next two pages and "Continue".

Personal information:

Contact Information:

Step #9
Select your employment status, enter your employer’s information (if required), and answer each question shown on the page by select “Yes” or “No” as appropriate. For most people, the answer to all of these questions will be “No”, however, you should answer honestly.

Select "Continue".

Step #10
Decide how you will fund your account and fill in the appropriate information. Electronic Bank transfer is probably the easiest method.

If you’re not ready to fund your account yet, select “Add money later”. 

Select "Continue".

Step #11
When you receive dividends on your holdings,  you'll want to put them back to work growing your investment as quickly as possible.  Selecting "Reinvest" makes this happen automatically, whenever dividends are distributed to your account.

Select "Continue".

Step #12
Verify all of the information that you've entered is correct and submit your application.

Note: You may get a pop-up asking you to verify your identity.  If so, simply answer each multiple choice question accurately and select "Continue".

Step #13
Create your online login, then "Continue".

That's it, once your account has been approved and funded, you'll be ready to start investing!

Now that you've set up your investment account, it's time to start investing! Let's jump right in.

Step #1
Log into your new Vanguard account and select "My Accounts", then "Buy & Sell" from the top menu.

Step #2
Select "Trade stocks and listed securities".

Step #3
This is a page you want to get very familiar with. Whenever you trade (buy/sell) stocks or ETFs you will first be required to input your order into a form like this one. Regardless of what trading platform you decide to use, there will always be an interface similar to this.

Enter a stock or ETF into the "Symbol" field.  I use VTI below, but you can enter any stock symbol you choose. Once you've entered a stock or ETF, select "Get Quote".

Step #4
Notice that the right half of the screen now gives you information about the stock or ETF you've selected. There are also additional links available for more detailed information, as well as help pages and a phone icon which provides a contact number to speak to a Vanguard employee who can help you with any questions/issues you may have.

Step #5
Select your account from the drop-down, select "Buy" as your transaction type, select the number of shares you want to purchase and choose an order Type. I suggest selecting "Market" as your order type for now. You can read about all the order types here.

Make sure the Net amount listed under "Estimated transaction details" is less than the amount listed as "Funds available to trade" (under the "Available balance" tab on the right). If it isn't, you'll have to decrease the number of shares you're attempting to purchase, choose a different cheaper stock/ETF to buy, or deposit more money into your account.

Select "Continue".

Step #6
Review your order. If everything looks as expected, select "Submit".

Step #7
Take a look at your order summary and make sure there are no issues. 

You've just successfully executed your first stock trade!

You can use this exact same process to buy any stock or ETF you are interested in. It's that simple!

If you're interested in investing in a mutual fund or index fund (an excellent idea indeed!), the process is a little different. Mutual funds aren't traded on an exchange like individual stocks and ETFs, so there's not as much flexibility when setting your orders. Here's how it's done.

Step #1
Log into your Vanguard account and select "My Accounts" and then "Buy & Sell" from the top menu.

Step #2
Select "Buy Vanguard funds".

Step #3
Each of your accounts will be displayed with the funds you own underneath them. Notice the difference between this interface and the one used to trade stocks and ETFs.

Step #4
Under "Where's the money going?", select the checkbox next to "Add another Vanguard mutual fund".

Step #5
Use the text entry field to enter the mutual fund you are interested in purchasing and press Enter.

Note: Many of the funds have minimum purchase requirements.

Step #6
Enter the amount you want to invest in the text entry field next to the fund you just added and select "Continue". 

Select where your investment funds will be withdrawn from using the drop-down under "Where's the money coming from?"

Be sure that the amount of "Funds available to trade" is higher than the "Total buy amount".  If it isn't, you'll have to decrease the amount you are attempting to invest, select a different mutual fund, or deposit more money into your account before completing your transaction. 

Select "Continue".

Step #7
Review your order. If everything looks as expected, select "Submit".

Step #8
Take a look at your order summary and make sure there were no issues. 

You're now the proud owner of your very own mutual fund!

Congratulations, you are now an investor!!!

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