Here's What Happens if You Pick the Wrong Brokerage Account

If you have money earmarked for emergency expenses, it's best to keep it in a safe place like a savings account. But if you have money you don't need for emergency fund purposes, then it's a good idea to invest your cash so it can grow into a larger sum over time.

When it comes to putting money into a brokerage account, you have choices. But one thing you don't want to do is choose the wrong account.

Signs you've picked the wrong brokerage account

Your brokerage account should make it easy for you to acquire the assets you want without losing money to various fees. So if yours doesn't fit that bill, it's a sign you've chosen the wrong one. And if you keep your money in the wrong brokerage account, you might lose out in the form of:

• Costly fees that eat away at your returns
• Fewer investment choices
• A harder time managing your portfolio

Let's break these factors down. Some brokerage accounts charge a fee for making trades, but there are many, many that don't. If you're charged a fee every time you make a transaction, like buying or selling a stock, it's apt to eat away at your returns. You don't want that.

Similarly, some brokerage accounts charge what's called an inactivity fee. This comes into play when you don't make trades for an extended period of time. This is also something you don't want. If you're happy with the assets you've chosen, you shouldn't feel compelled to buy more or sell some just to avoid being charged a fee.

Now let's talk about investment choices. Most brokerage accounts will allow you to buy a range of stocks and ETFs, or exchange-traded funds, which are funds that trade publicly. Some brokerages also let you buy crypto. But not every brokerage account allows you to buy assets on a fractional basis.

With fractional investing, you can buy a piece of a share of stock or ETF if a full share isn't something you can afford, or if you simply don't want to own a full share. The upside of fractional investing is that it can make it easier to build a diversified portfolio. So if your brokerage account doesn't offer this option, it could pay to move over to one that does.

Finally, your brokerage account's platform should be easy to navigate. If it isn't, you might stop checking up on your investments or stop buying stocks because you feel it's a hassle. That's not a good thing. If your brokerage account is difficult to use, you're apt to struggle to manage your portfolio, and that could have negative consequences long term.

You're not stuck with a bad brokerage account

If you end up unhappy with the brokerage account you've chosen, don't resign yourself to it. Instead, explore your options for finding a new one. Ideally, investing is something you'll do over a long period, so it should be an easy, rewarding process all in.