First, protect what you have
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.
★ Don't close the account that pays you to keep it.
Before a taxable 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.
★ Tax-advantaged first, taxable second.
Before you pick anyone
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.
Before you send any firm money, the SEC says to check the background of the firm and any individual
broker. Do it free at
investor.gov
— the search pulls FINRA BrokerCheck and the Investment Adviser Public Disclosure database, including
disciplinary history. Also read the firm's Form CRS (its customer relationship summary) and confirm
it is a SIPC member.
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.
★ Check the firm before you trust the name.
How it works
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.
★ Read every screen before you click next.
Read this before you sign
Two things that catch beginners
Some applications make a margin account the default. A margin account lets the firm lend you
money against your investments, charge you interest, and sell your holdings without advance notice if
you can't cover a margin call. Confirm you selected a plain cash account, not margin, before you sign.
"$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.
★ Zero commission is not zero cost.
What's protected
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.
★ Protected from the firm failing. Not protected from the market.
After you open it
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.
★ Starting at 25 costs a fraction of starting at 50.
If you draw, or might draw, VA Pension
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.
If you receive Veterans Pension, or think you might ever need to apply for it, check the effect before
you move a large sum — a separation payment, a retro payout, an inheritance. This limit resets every
December 1. Confirm the current figure at VA's own page,
va.gov/pension/veterans-pension-rates,
before you rely on it.
★ Know the pension limit before you move the money.