How to Open a Brokerage Account
You've never invested outside TSP. Before you open anything, protect what you already have. Then check the firm, know the steps, and know what actually protects your money.
Don't abandon your TSP
TSP is the Thrift Savings Plan — the retirement account you had in uniform. If you have $200 or more in it, you do not have to cash it out or move it when you separate. You can leave it in TSP, keep it invested, change how it's invested, and later move eligible money from other retirement accounts into it. The Consumer Financial Protection Bureau (CFPB) calls TSP one of the best options for retirement investing for service members, because its fees run well below the average mutual fund.
Under the Blended Retirement System, contribute at least 5% to TSP to get the full government match. That's free money. Get that in place before you open a brokerage account.
Look at an IRA before a plain brokerage account
A regular brokerage account is a taxable account — you owe tax on it every year. An IRA (Individual Retirement Account) or Roth IRA lets your money grow without that yearly tax bill, under IRS rules.
- 2026 IRA contribution limit: $7,500 (up from $7,000)
- 2026 IRA catch-up limit, age 50 and over: $1,100 (up from $1,000)
- 2026 elective deferral limit for 401(k), 403(b), governmental 457, and TSP: $24,500 (up from $23,500)
Source: irs.gov, 401(k) and IRA limit increases for 2026. None of this stops you from also opening a brokerage account — it just means TSP and an IRA come first.
No one ranks brokerage firms for you
I'm not handing you a top three and calling it done. No government agency ranks or endorses brokerage firms. Big, familiar names — Fidelity, Charles Schwab, Robinhood — are examples of large retail brokers, not a government-vetted list.
Compare fees and account minimums yourself, on each firm's own published fee schedule. Those change without notice, so don't rely on a figure printed on any flyer.
Five steps to open an account
- Choose a broker. Check its registration at investor.gov first (see above). Don't pick on convenience alone.
- Sign up online. Expect more than your name and address. The SEC says a firm will ask for your Social Security number, address, phone, email, date of birth, annual income, net worth, investment objectives, risk tolerance, investment experience, time horizon, liquidity needs, other investments you hold, and your employment status and occupation. Answer accurately — the firm uses this to decide what it may recommend to you.
- Verify your identity. The firm will ask for government-issued identification — a driver's license or passport — to confirm who you are.
- Fund the account. You will also choose how uninvested cash is handled — swept to a bank deposit account, swept to a money market fund, or left uninvested. Ask what rate the default sweep pays; it's often far below market.
- Start investing. Choose investments based on your goals and how much risk you can accept.
Two things that catch beginners
"$0 commissions" does not mean free. The SEC lists transaction costs (commissions, markups, markdowns) and account fees (maintenance, inactivity, closing, margin interest, wire transfers) a broker can still charge. Some firms get paid by routing your order to a market maker instead of charging a commission — called payment for order flow. Ask for the full fee schedule before you open.
What SIPC and FDIC actually cover
SIPC (Securities Investor Protection Corporation) coverage runs up to $500,000, including a $250,000 limit for cash, if your brokerage firm itself fails. SIPC does not protect you against investment losses — only against the firm failing.
If your cash sits in a bank sweep, FDIC insurance covers $250,000 per depositor, per insured bank, for each account ownership category — a joint account can carry more coverage than a single one.
Money habits that matter more than which broker you pick
- Build an emergency fund. There's no single right number — CFPB says look at the unexpected expenses you've actually had and set your goal from that; even a small amount provides real security, so start where you can. As a target, FDIC says financial experts generally recommend at least six months of living expenses, held in a federally insured account or CD. (fdic.gov, consumerfinance.gov)
- Pay off high-interest debt. CFPB's own guidance for service members: make a plan and start early.
- Invest consistently. Start small and keep going.
- Diversify. The SEC defines diversification as spreading your money among different investments so you're not relying on one. A mutual fund or ETF (exchange-traded fund) pools many holdings, but the SEC warns a narrowly focused fund won't necessarily give you real diversification — check what it actually holds.
- Stay informed and be patient. CFPB's own numbers make the case for starting early: contributing from age 25 takes roughly $200 a month to reach $500,000 by retirement; starting at 50 takes more than $1,500 a month — nearly eight times as much — to get there.
Moving money into a brokerage account can affect Veterans Pension
This does not touch service-connected disability compensation. That benefit is not needs-based, and this has no effect on it.
But Veterans Pension and Survivors Pension are net-worth tested. From December 1, 2025 through November 30, 2026, the net worth limit to qualify for Veterans Pension is $163,699, and VA counts your and your dependents' assets and income together against that limit. Money you move into a brokerage account still counts.