Picking a brokerage

What to look for

• Low costs: no account fees, $0 trades on stocks and ETFs, and a good range of low-cost index funds.
• The accounts you need: such as a Roth IRA, a regular brokerage account or a custodial account.
• Beginner-friendly features: fractional shares, automatic investing and no minimum balance.
• Security: two-factor authentication and clear customer support.

Protections you have

At a US brokerage that's a member of SIPC, your account is protected up to $500,000 (including up to $250,000 in cash) if the brokerage itself fails and your assets are missing. SIPC does not protect you from investments losing value.

That's different from FDIC insurance on bank deposits, which covers up to $250,000 per depositor, per bank, per ownership category. Investments are never FDIC-insured, even when you buy them through a bank.

Red flags

• A firm or person that isn't registered. Check any broker or adviser for free on FINRA BrokerCheck or the SEC's Investor.gov.
• Pressure to act fast, or promises of guaranteed or unusually high returns.
• An app that gamifies trading with confetti, streaks or push notifications nudging you to trade more.
• Being asked to send money by gift card, wire to a person, or crypto to “unlock” your account.