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4 Steps Millennials Must Take Before and After Opening an Investment Account

by Peter J. Creedon

This article was originally featured on ChelseaKrost.com.

1) What is the purpose of your investment account (retire, fun, vacation, build for future goal, etc.)?

If you know the purpose of your investment then you can select the type of account e.g. Individual, Joint, Traditional IRA, Roth IRA. If you are new or not comfortable with investments, research and read to get a basic understanding of the terminology and how the different markets work. Understand the risks involved. Markets and your investments will change in value, and they are not always going up in value.

2) Do you want to open an investment account yourself? If yes, here are a few options and steps to take.

If you feel comfortable doing things yourself, you can use an online broker and place trades (buy or sell) for minimal costs. Usually a buy or a sell can range between free to $8 each trade. Direct online discount brokers provide you with information from account opening instructions, choices of account types, research and offerings such as stocks, mutual funds, exchange traded funds (ETF’s), index funds, bonds, options and more while making the experience generally easy. There is call‐in account support, however, your account management is geared to being done on‐line. When closing an investment account be aware of any account closing fees or penalties. There are retail outlets (walk‐in branch offices), but their focus and costs are usually higher to open an investment account.

3) If you want someone to open the investment account for you, consider the following:

Understand the differences between brokers, adviser and a Certified Financial Planner (CFP®). Brokers and advisers are called registered representatives. They may only be a broker or adviser who only opens and manages your investment accounts, but not develop the corresponding financial plan that ties in all aspects of a person’s financial life. A certified financial planner (CFP®), develops the financial plan, and may manage the investment accounts while providing you with information (listed above) that a broker or advisor would also provide you with.

There are a few stand-alone or discount brokers that have their version of the robo adviser. Here you can open an online account. The process takes you through the basics (name, age, income) invest (how much risk your willing to take), purpose of the investment account, and rebalance your funds for a (1/4 – 1//2 of one percent of the assets). However, their product, services, and solutions may not be appropriate for you (a one size fits all solution). You may not be able to talk to an algorithm or robo adviser to ask all or any financial life questions.

Another option, consult with a Certified Financial Planner (CFP®), he/she can guide, advise and educate you in investments, develop your financial plan, help you complete the application, and help put all the pieces of your financial plan and investment account life into perspective. You will receive a dedicated personal Certified Financial Planner (CFP®) that will answer any questions you may have.

4) What if I need more assistance?

If you need more assistance or want someone to take care of the investment management and paperwork, you should interview a few brokers, advisers, or a Certified Financial Planner (CFP®). Check them out by making sure the company the broker adviser or Certified Financial Planner (CFP®) is reputable. Select the one you feel comfortable with and understand your goals. The Certified Financial Planner (CFP®) will provide you with choices and an education to help you define, raise your understanding of your goals, help open your investment account, understand your tolerance to risk and develop your financial plan, which will include your investment account management. This sounds easy, however, it may not be if you are new to opening an investment account and developing a corresponding financial plan. It is very important to be realistic about your investment selection, decision, and strategy.

I hear lots of stories of winning investment picks, but it seems few people talk about their losses. Losers are inevitable if you are in any market. Once you have the basics under control, the next area you need is a trading strategy. It is not all about buying, the other half is about having an exit strategy, knowing when to let go, – sell. People tend to get emotionally attached to a position (investment). You really need to have a firm buy and sell strategy. So if you say you will sell if you get a 25% increase in value, sell. The more difficult decision is to sell the position when it is worth less than you paid. When you sell it, it becomes a real loss. If your strategy is to sell at no greater than a 15% loss, then sell and look for another opportunity. Leave the emotions at the door, remain firm, and do not waiver.

So now you have a general overview of what to consider before opening an investment account. Do the online application or complete the offline paperwork with your advisor or Certified Financial Planner (CFP®) that will help you complete and answer questions, complete the application, sign the bottom line and send in the funds.

Remember to understand what you are doing (you don’t want to buy an investment with the question “What did I just do” rather than “I get it”), do your homework, research, and know what you are buying (investing in), be aware of the costs (behind the scene too), have a strategy, stick with it and good luck.


Peter J. Creedon CFP®, ChFC, CLU is the Founder and CEO of Crystal Brook Advisors, a NY Registered Investment Advisory firm. For over 15 years, Peter has successfully advised, guided, and educated young professionals, families, private wealth investors, small businesses, and large corporations in comprehensive financial planning and investment management solutions. Peter’s counseling assists investors, businesses, and corporations through their financial challenges and triumphs of life. For inquiries or questions, contact: peter@crystalbrookadvisors.com.

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