What Is a Brokerage Account? A Parent's Plain-English Guide

A brokerage account is the account that actually holds your investments — the place where your stocks, funds, and bonds live.

Bank account vs. brokerage account

The simplest way to picture it: a bank account is where you keep cash, and a brokerage account is where you keep the things that grow. You move money in, use it to buy investments, and the account keeps track of what you own and what it’s worth. Cash mostly sits still; investments in a brokerage account go to work.

A kid’s brokerage account is usually “custodial”

Kids can’t open their own brokerage account, so a parent opens a custodial one — typically a UTMA or a custodial Roth IRA — and manages it until the child is old enough to take over. The money and the investments legally belong to the child; the parent is just the driver for now.

How it actually works

• Opening it is quick and usually free at the major brokerages, often with no minimum to start.
• Funding it means linking a bank account and transferring money in.
• Choosing investments is up to you — the brokerage doesn’t pick for you. A broad, low-cost index fund is a common first holding.
• Accessing money: a brokerage doesn’t lock up your cash the way some accounts do — you can generally sell and withdraw, subject to the account’s rules (a custodial account still belongs to the child; a Roth has its own withdrawal rules).

Once you understand the account itself, the natural next step is the sequence for actually putting it to work — see how to start investing for your child for the five-step version.

This explains what a brokerage account is and how it fits. Which brokerage and which investments are right for you is a conversation for a financial advisor.

Frequently asked questions

What is a brokerage account, in simple terms?

It's the account that holds your investments — stocks, funds, and bonds. You put money in, buy investments with it, and the account tracks what you own and what it's worth.

What's the difference between a brokerage account and a bank account?

A bank account holds cash that mostly sits still; a brokerage account holds investments that grow. You use the money in a brokerage account to buy stocks and funds rather than just storing it.

Can a kid have a brokerage account?

Not on their own — a parent opens a custodial brokerage account (a UTMA or custodial Roth IRA) and manages it until the child reaches the age of majority. The money legally belongs to the child.

How do you open a brokerage account for a child?

Choose a brokerage, open a custodial account with yourself as custodian and your child as beneficiary, fund it from a bank account, and pick an investment. It's usually quick, free, and often has no minimum.

Is money in a brokerage account locked up?

No. Unlike some accounts, a brokerage generally lets you sell investments and access the money, subject to the account's rules — though a custodial account still belongs to the child and a Roth IRA has its own withdrawal rules.