Straight Brokerage Account
A straight brokerage account is an account at a financial institution that allows an investor to buy, sell, trade and hold stocks, bonds, mutual funds, options, etc. Investment income, such as dividends and interest payments, and capital gains, generated from securities such as stocks sold at a profit, are generally taxable in the year they are received. Because no taxes are withheld when investment income and gains are generated, you must report them at year-end on your tax return.
Capital gain income from assets held one year or less is taxed at the ordinary income tax rates. Capital gain income from assets held longer than one year is generally taxed at a special long-term capital gains rate. One way to save on taxes is to segregate your investment capital into long-term holdings and short-term trading accounts.
In general, traditional (full service) brokerages provide a wider range of services while discount brokers tailor to the more self-directed investor. Brokerage fees depend on scope of services, the structure of commissions, the volume and the value of transactions. You can lower brokerage fees by carefully selecting the type of brokerage services you want to use and by fully understanding the structure of commissions.
Investors must fully understand the potential risks of investing without the help of a trained Stockbroker or Investment Advisor. Before investing or trading online, investors are advised to research the online brokers they plan to employ, assuring that those firms are licensed within their state.
Choosing the right account to hold your investments is part of the wealth-creation process. Consult a financial planner to make sure you are on the right track.
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* It is not the intent of Dee Turkalj to provide tax advice. Gold Coast Securities, Inc, its affiliates and agents are not in the business of providing tax advice. Please contact your tax advisor with all questions regarding how anything discussed above may affect your tax situation