Investing Your Stimulus Check? Here's What to Look for in a Broker

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The government is currently delivering $1,400 stimulus checks to eligible Americans.

When you get yours, you may plan to invest the money. Investing it can be financially smart — if you have an emergency fund, have your bills paid, don’t have high-interest debt, and don’t plan to use the funds for a purchase in the next few years.

If you invest, find the right broker to help you make good use of the money. Here are a few key things to look for if you need to open an account with a new broker.

1. Minimum balance requirements you can meet

Some brokerage firms require a minimum deposit to open an account. While a $1,400 stimulus check should provide enough to meet most firms’ requirements, be sure to check the rules for account minimums.

2. The account types you want

You’ll invest your stimulus money in a taxable brokerage account or in a tax-advantaged retirement account such as an IRA. While virtually all brokers offer taxable accounts, not all offer every type of retirement account. Check that your potential brokerage firm offers the kind of account you’re looking for.

3. A variety of assets to invest in

You can buy many kinds of investments — for instance, you could buy shares of individual companies, or go with exchange-traded funds (ETFs) to get exposure to the market as a whole or to different segments of it. You can also consider alternative investments such as cryptocurrencies, if you’re comfortable taking a bigger risk or you’re diversifying an existing portfolio. Make sure the brokerage firm offers every kind of asset you’re interested in.

4. Reasonable commissions and fees

Most brokers have eliminated commission fees for trading stocks and ETFs, so be sure yours has. There may also be other fees — most brokers still charge for trading options, for example. Some impose fees for paper statements, or for executing trades over the phone or closing an account.

Read the fine print for each broker, and look for a broker offering the lowest overall cost.

5. Fractional shares

While a $1,400 stimulus check is generous, there are many stocks that have a higher per-share cost. But you can still buy in if your broker offers fractional shares. That means you can buy partial shares, so your investments aren’t limited to only the full shares you can afford. You can invest in whatever companies you want — you simply specify how much you want to invest in them, no matter the per-share cost.

Though a growing number of brokers make fractional shares available, not all have. Consider a brokerage firm that offers this so you can have the widest variety of investment options.

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