Should You Have More Than One Brokerage Account?

The benefit of putting money into a brokerage account, as opposed to just leaving it in a savings account, is getting a chance to invest your money in stocks and other assets that have the potential to generate strong returns over time. That could be your ticket to meeting your various goals.

Over the past 50 years, the stock market has averaged an annual 10% return before inflation, as measured by the performance of the S&P 500. Compare that to even the generous 4% interest rate high-yield savings accounts are paying these days (a rate that may not last), and it's clear that investing is a more effective means of growing wealth. 

You may be inclined to open a single brokerage account and keep all of your investments there. But could opening more than one brokerage account work to your benefit?

When you're working toward different goals

If you're saving for a single goal, then sticking to one brokerage account could be your best bet. That way, you'll have a handle on all of your money and it will be easy to keep tabs on your investment portfolio. When you have multiple brokerage accounts, you need to go back and forth comparing your holdings to decide which stocks or assets to buy. 

But having more than one brokerage account could be a good thing if you're trying to save for different goals and want to keep your money separate. Let's say you're trying to save for retirement as well as your kids' college education. You may decide to open an IRA for retirement savings purposes and reap some tax benefits along the way. And you might then decide to keep your kids' college fund in a taxable brokerage account.

Having these assets separated could work to your benefit. Let's say the time to pay college tuition arrives and you're a little short of meeting your goal. You may be tempted to pull from your retirement savings, but that's a risky move that could leave you short on money later in life. If your retirement savings are being housed in a completely separate brokerage account, you may be more inclined to just leave that money alone and figure out a back-up plan for paying for college. 

Make sure to stay organized

The main drawback of having two separate brokerage accounts is having to keep track of those different accounts. But if you're someone who's organized, that shouldn't be a problem.

That said, one thing you may want to do is check all of your brokerage accounts before adding investments to one. It may be that you own shares of a given company in one brokerage account, and you've forgotten that. But you may not want to add those shares when it's a company you're already invested in.

All told, you absolutely can have more than one brokerage account, and it could even be a good idea. But make sure to keep track of your money no matter what.