Updated February 24, 2023

Can I Have Multiple Trading Accounts

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Is it a good (or bad) idea to have multiple trading accounts? Find out what you need to know about having two or more investment accounts.

Can I have Multiple Trading Accounts?

It is perfectly allowed to have multiple trading accounts at more than one brokerage. There's no legal limit to how many investment accounts you can open. In fact, having multiple brokerage accounts can offer more opportunities, especially if you want to make different types of investments.

But there are some reasons why some investors may want to stick with just a single brokerage.

Learn how having multiple brokerage accounts can help you reach your goals faster. We'll also go over reasons why you may want just one.

Benefits of Multiple Investment Accounts

Here are five reasons to open more than one brokerage account.

See the latest brokerage promotions for cash bonuses, free stock trades, and more.

1. Open Different Account Types

If you want to invest for different purposes, then it's best to have more than one investment account. Let's say you want to invest for buying a house in five years and retirement savings, then you will want to open a regular investing account and a special retirement account.

Different account types are ideal for different goals. They also have their own withdrawal rules and tax consequences. Here are the different accounts you may open:

  • Taxable: This is a general purpose investment account. You can withdraw funds at any time. There's no limit to how much you can invest.

  • Retirement (Traditional and Roth IRA). These accounts offer tax advantages, but there are withdrawal rules if you withdraw funds before age 59. There is a contribution limit.

  • 529 College Savings: Can only be used for college education savings. This account also offers tax benefits.

  • Custodial Account: This is an account that you control for a minor.

  • Business: There are various retirement accounts designed for small business or self-employed individuals, like SIMPLE and SEP IRAs.

Not all brokerages offer all types of accounts. For example, Robinhood offers taxable accounts and retirement accounts with free trades, but it doesn't offer college and education savings options. So you may want to open a tax-advantaged college savings plan with another trading platform like Fidelity. There are no rules on how many brokers you're allowed to use.

Brokers will have their own rules on how many accounts you can have with them. Robinhood only lets each person open one taxable account. So if you want a secondary taxable account, you'll have to go to another broker.

2. Trade Different Assets

What do you want to trade? This will also affect which brokerages you use. Not all stock brokers offer everything, so you may have to open two trading accounts or more in order to access all the options.

The different types of investment assets you can trade usually include:

  • Stocks
  • Exchange Traded Funds (ETFs)
  • Bonds
  • Mutual Funds
  • Options
  • Futures
  • Forex
  • Cryptocurrencies

One particular brokerage may offer a lot of stocks and ETFs, but no mutual funds (such as the case with M1 Finance). So you may also want to open another brokerage account with a well-known mutual fund company like Vanguard.

If you want to trade more complicated types of investments like cryptocurrencies, futures and Forex, you will have to find a brokerage with those offerings. For example, Robinhood offers cryptocurrencies, while TD Ameritrade offers futures and forex.

And if you want to invest in real estate, then you'll have to open an account with a specialized real estate investing platform like Fundrise.

If you do have multiple accounts, use an investment tracker like Empower to keep track of all your portfolios in one place. It combines all your holdings to analyze the performance of your overall portfolio.

3. Access Different Benefits and Features

Not all brokerages offer the same level of services and features. One broker may provide a practice trading account, while others have outstanding research resources and monitoring tools.

By taking advantage of the different features and strengths of each broker, you can gain access to more services.

Some services to consider are:

Auto investing
Hands-off investors will want to look for a robo-advisor. Maybe you want to actively manage your taxable account, but prefer a robo-advisor to manage your IRA account. In that case, it may make sense to use two different brokerages.

Margin account
This type of account allows you to use borrowed money to make trades, giving you more purchasing power. Not all brokerages offer this feature. For the ones that do, some may have lower margin rates. If this is something you want to try, you may open another account with a broker with the best rates.

Day trades
Some brokerages may have restrictions on very active traders. If you fit the definition of a day trader, it's not a bad idea to spread out your trading activities across different brokerage accounts.

4. Name Different Beneficiaries

Having more than 1 brokerage account can also be used for estate planning.

With multiple brokerage accounts, you can name a different family member as the beneficiary for each account. This is the person who will inherit your assets upon your death. If you have a few heirs, this can be a good way to plan your estate outside of a will.

Another way is to set up a joint account, which will name another person as joint owner. Both you and your co-owner will have full access. This is usually done between spouses.

5. Higher SIPC Protection Limit

The Securities Investor Protection Corporation (SIPC) insures investments held at each brokerage firm up to $500,000 per account type.

If you're a very high net-worth investor, spreading out your investments across multiple brokerage firms will give you more coverage, in the very unlikely event that one of them fail.

Benefits of Using Just One Brokerage Firm

There are also reasons why you may just want to stick to using one brokerage account. Read on.

It's easier to keep track of one account and log in information. You don't have to keep logging into each account to manage different portfolios. Just using one broker will automatically consolidate your holdings, so you can easily see exactly how your investments are doing, and if you need to make any changes.

Remember that you can open different account types with the same stock broker. For example, you can open a taxable account, IRA, and 529 College Savings under the same firm.

Perks for higher balances
Some brokerages offer special perks if you hit a certain minimum balance. Wealthfront offers advanced investing strategies for those with over $100,000 balance. Robinhood eliminates day trading restrictions for those with $25,000.

If you have your investments spread out among several platforms, then you may never have a big enough account size to receive premium perks.

Can I Have More than One IRA Account?

You are allowed to open as many IRA accounts as you want. However, no matter how many you have, there is still a total contribution limit among all your IRAs. For 2020, the total contribution limit is $6,000 ($7,000 if you're age 50 or older).

If you have a Traditional and Roth IRA account, the total contribution amount between the two cannot exceed that limit. Likewise, the same is true if you have two Roth IRA accounts.

For small business owners or self-employed individuals, you can contribute to a personal IRA account, in addition to a SIMPLE or SEP IRA (which have their own contribution limits).

Bottom Line

Not all brokerages are created equal. Some are excellent in one area and lacking in another. Having multiple brokerage accounts will allow you to access all the services and features that just 1 cannot provide alone. This will help meet your investing needs and hopefully reach your goals faster.

You can use as many brokerage companies as you want. There is no legal limit to the number of brokerage accounts you can have. Just be aware of rules and contribution limits to each account.]

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