If you are involved in using the stock market and already have an investing account, you may be looking for a way to save some money. Is it worth it to have multiple brokerage accounts? What are the pros and cons of such a solution? What should you take care of when you decide to open a brokerage account?
Legality of multiple brokerage accounts
Of course, you can have more than one brokerage account, but you will have to take care of the paperwork. First of all, you will have to fill out a lot of applications and forms, such as the tax ones. You will also have to remember to verify your data when setting up a new invest account. This is one of the biggest disadvantages of being a client of several brokers.
Second brokerage account can reduce fees
Many investors choose to set up a new broker account to save on commissions. Every company has to make money on something, so it introduces fees for some investments, such as buying stocks. On the other hand, you can buy some assets for free, which makes the offer attractive. In theory, you can use different accounts to buy different investment instruments to reduce the overall costs. In practice, unless you are a day-trader with millions of dollars at your disposal, the profits are not worth the effort. In most of the cases, your savings will oscillate about a few dozen dollars per year.
Second broker account increases level of risk
Having an investing account means some risk. Having a password and sharing your personal information with the broker are needed, but they can also be hacked. What’s more, you are depositing your money, and that means you risk losing it. If you decide to open a second investing account, you should secure it with a different password, otherwise you could fall victim to phishing, which is not likely what you want. The better passwords and VPN’s, the better you sleep. To sum up: an additional account means a higher risk of a hacking attack, although if it happens, you will probably lose less money.
Access to more investments
Even the best brokerage accounts do not offer all stocks, ETFs or CFDs. Buying stocks listed on the New York or London stock exchanges won't be difficult, but what about Mozambique or Armenia stock brokerage? These are very exotic examples, but access to some investments is more difficult than you might expect. If you open a brokerage account on another platform, you will gain the opportunity to invest in new markets. However, it's worth opting for a broker from another part of the world. It will increase your chances of buying stocks and ETFs that were previously unattainable. Possession of an account in some countries might be impossible or very tough. A good example is the U.S.
Investing as a company
You need to keep in mind that a business brokerage account operates under a slightly different set of rules than an individual one. To be able to set one up, your company must have legal personality, and this means some next complications. First of all, shareholders or co-owners must agree to take part in investments and establish new accounts. Secondly, setting up a second account is not always justified, which may cause additional problems. Sounds like a nightmare? Actually it is. If you represent a company, you should definitely stay with one investment account.
Access to knowledge base
Almost all stockbrokerage companies offer courses and training materials to their clients. Is it worth setting up a new brokerage account to gain access to them? There is certainly an argument for it. However, it should not be the only reason for such a decision. There are many free courses, webinars and blogs on the Internet, and the knowledge gained there will be at a similar level. The best brokerage accounts for people who care a lot about knowledge are XTB and Interactive brokers. If you own one of them, it is unlikely to be worth becoming a client of another company.
Mutual investing
You already have an individual brokerage account, but you want to invest with your partner. Is it worth setting up another one in this situation? Of course, it is. A joint investment account will allow you to build family wealth, while allowing you to keep your own money. However, you must remember that setting up such an account involves additional formalities and is not always possible. Exactly the same as with a joint bank account, but in this case, problems might arise.
Diversification using next investment account
The undoubted advantage of having several accounts is the separation of your assets. If servers crash, your funds may be temporarily blocked. If you fear similar situations, setting up a second investment account is a great idea. However, you must remember that diversification will not protect you from account seizure by the tax administration or debt collectors.
So, should you have multiple brokerage accounts?
An additional individual brokerage account may be warranted. If the above arguments have convinced you of this decision, take a peek at our article on setting up an invest account. We have included in it the most important information on this subject. Remember also that investing is not limited to buying stocks, ETFs and CFDs. Good alternatives will be, for example, buying gold or silver. Real estate is also worth considering!
