One common question investors have is whether they should have multiple brokerage accounts. What are the benefits and disadvantages of having multiple investment accounts?
In this article we will go over the advantages and disadvantages of having multiple brokerage accounts, and whether you should have one or more.
Is it good to have multiple investment or brokerage accounts?
Yes, for some investors there are clear advantages of having multiple brokerage accounts. These advantages include:
- Access to multiple markets
- Access to different securities and financial instruments
- Separate different investment portfolios
- Separate brokerage accounts for trading and investing
- Take advantage of lower fees
- Take advantage of discounts and other perks
- Access to more market research
Access to multiple markets
One of the advantages of having multiple brokerage accounts is to access different markets. Some brokers only allow you to trade on the main exchanges. This can be very limiting for investors that are looking at stocks globally. Some of these brokers might not even have an ETF that you really want to invest in.
By having multiple investment accounts, you are able to access more markets, and if for some reason one of your brokers does not allow you to invest in a certain market or security, you can always use the other brokerage account.
Access to different securities
In a similar fashion, different brokers will often have different financial instruments you can trade. If you only have one account you are limited to trading what the broker has to offer. By having different brokers, you can have access to more financial instruments to trade, and it can be very advantageous, especially for seasoned investors and experienced traders.
Separate different investment portfolios
Another great advantage is that you can easily separate investment portfolios. If you have an investment account with your spouse, you might want to have that brokerage account specifically for that. While at the same time keeping your individual trading or investment account separate. This makes it easy to control your trades and separating things makes it also easier for your spouse to check the account. You might even want to have an account where you follow a certain investment strategy, like growth, and another one more focused on value investing.
Separate brokerage accounts for trading and investing
Not only are you able to separate different brokerage accounts based on the ownership but also in terms of strategy. One advantage of having at least two brokerage accounts is that you can have a margin account where you do some trading, and separate investment accounts for the long term.
Most investors find this easier to control each account this way, and it is also beneficial to have everything separated.
Take advantage of lower fees on some brokers
Another clear advantage of having multiple brokerage accounts is that you can take advantage of lower fees. So for example, if one broker charges more for an order in a specific market than the other you can use the cheaper one. For example, Robinhood allows you to invest without charging anything for an order. This way you can place most of your trades there. However, if they do not have a certain market available that you want to invest in, you can always use another broker.
This can also be applied to margin, and if you use margin you can find the broker with the lowest margin rates.
Take advantage of discounts and other perks
Having multiple brokerage accounts also allows you to get access to more discounts and perks. If you just have one brokerage account, you are somewhat limited. By having multiple accounts you can take advantage of all of the discounts, as well as some perks that come with different brokers. For example, some brokers offer a lot of analytical tools that you can use to track your portfolio or to do stock DD. You might want to have different investment accounts for these reasons.
Access to more market research
Finally, the last advantage is access to market research. Although some brokers do not share any market research, some do. If you have several accounts, you will get access to a lot more information about the markets that might help in keeping you informed about the current market conditions.
Is it bad to have multiple brokerage accounts?
Although there are some clear advantages there are also disadvantages to having more than one investment account. Here are the main ones:
- Possibly higher fees
- Difficult to keep track
- Tax nightmare
- Multiple passwords to keep track
- Adapt to different platforms
Possible higher fees
Although having multiple investment accounts can be a way of saving on fees, it can also increase the fees you pay. Some brokers will charge an annual fee for each account, and having multiple accounts will increase the fees you have to pay yearly. This depends on the broker, and it is one of the reasons why you should be extremely careful when selecting your broker.
Difficult to keep track
Having multiple accounts also means having to track more accounts. This might be complicated for some of us who do not have a lot of time to log in and out of multiple accounts every day. Additionally, if you are trading regularly and you plan on using different accounts, it might get tricky to track all of them.
If you have a lot of brokerage accounts, it can be a real hassle to fill in all the tax information at the end of the year. This also makes it difficult to track capital gains and to fill out the 1099 tax form. Keep in mind that this may cost you a lot of time, and depending on your situation it might not be worth having different investment accounts.
Multiple passwords to keep track
Multiple brokerage accounts also mean multiple passwords to keep track of. This can be extremely offputting for some investors who prefer to have everything in one place. It also has the cybersecurity risks of maybe having several accounts hacked.
Adapt to different platforms
Perhaps one of the least impactful consequences of having several accounts is that you need to know how to use all of the different platforms. Not all of us are extremely tech-savvy, and it might be enough to make some investors not want to have multiple accounts.
Should I have multiple brokerage accounts?
It depends. When it comes to having multiple brokerage accounts, you need to determine if the possible advantages outweigh the disadvantages depending on your personal situation. It might be a great to some investors, and terrible to others. So it really depends on yourself.
Should I use multiple investing apps?
Having multiple investing apps has several advantages, but it is ultimately a very personal decision. Depending on your goals and the amount of time you want to dedicate to investing, it might make sense to have different investing apps.
Is it smart to have two investment accounts?
It depends, having multiple investment accounts can be advantageous to certain investors, depending on their goals and how they manage their investments.
For investors that do trading and investing, having multiple brokerage accounts can be a way of separating their investing portfolio from their trading portfolio. Additionally, if you have a co-owned investing account, for example with your spouse this can be a great way of separating the different investment accounts.
Does it matter how many brokerage accounts you have?
No, you can have as many investment accounts as you wish. There is no limitation, and depending on your goals, and the type of investments you make it might be extremely beneficial to have several accounts.
How many investment portfolios should I have?
It depends on your financial goals, and the amount of time you want to dedicate to investing. Having different portfolios can be a great way of testing different investment strategies while keeping your portfolios completely separate. It can also be tiresome to keep track of multiple investment portfolios.
Can you own the same stock in two different accounts?
Yes, you can hold the same stock in two different brokerage accounts. In the US and Canada, there is no law that forbids investors from holding the same stock in two different brokerage accounts.
Can you buy stock on different accounts?
Yes, you can buy a stock on two different brokerage accounts. Some investors prefer to separate their retirement account, from their more aggressive investment account. Having two accounts can be extremely useful in this scenario.
You may also want to take advantage of some of the perks different brokerages offer, and having multiple brokerage accounts, in that case, might be very advantageous.
Can you buy the same stock twice?
Yes, you can buy the same stock multiple times on different brokerage accounts. However, you cannot buy and sell the same security four different times, during a period of 5 business days. This might be considered a violation of the current FINRA rules, in what is defined as the pattern day trader rule.
Can you buy the same stock over and over again?
Yes, you can buy the same stock using multiple brokerage accounts over and over again. The only limitation is that you will have to disclose if your ownership of the company is over 5% of the outstanding shares.
Can two people own the same stock?
Yes, two or more people can own the same stock, this is especially common if you have an investment account with your spouse or it can also happen when you have a business partner and decide to co-invest in the stock.
Is it illegal to have two brokerage accounts?
No, you can have as many brokerage accounts as you would like. In the US and Canada, there is no limit to the number of brokerage accounts an individual can have. Having more than one brokerage account can also be extremely useful.
For instance, you may want to use one of the accounts as a trading account, and the other one as an investment account. It can also make sense to have an investment account with your spouse, that is co-owned, while you keep your individual trading account.
Can you have two Robinhood accounts?
No, Robinhood only allows customers to have a single account in their name and their social security number. Therefore, it will not be possible to have more than one account with Robinhood.
Although having multiple brokerage accounts is not for every investor, there are clear benefits that come with it. You should consider that if you choose to have several investment accounts, it can be difficult to track all of them and their passwords.
For some investors that want to dedicate a lot of time, and effort to their portfolios having several accounts is always beneficial. On the other hand, if you are passive investors dollar-cost averaging into index funds, it does not make much sense to have more than one brokerage account.