Brokerage accounts are a type of investing account you can use for your financial goals. I personally use one to help me build a large down payment. Here's an EASY explanation of how to use brokerage accounts and how brokerage accounts are taxed.

DISCLAIMER:
I, Justine Nelson, am not a financial advisor! If you wish to seek the advice of a financial advisor before you make any investing decision, you can do so at your own discretion. I am simply providing this video as an educational tool to help you understand different financial resources available to you.

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NOTES FROM VIDEO
1:52 - What to use a brokerage account for
You can use a brokerage account to save for short, mid or long term goals. It doesn't necessarily have to include retirement. You can use a brokerage account to save money for a car, a down payment on a home, or use the money to buy a sailboat. You use after-tax dollars to fund a brokerage account.

2:40 - Pros to a brokerage account
You can use the money for just about anything and you can withdraw it at any time. You don't have to wait until retirement age to use this money.

2:58 - Cons to a brokerage account
You have to pay capital gains tax on money earned in this account.

3:13 - Short term capital gains tax vs long term capital gains tax
There is short term capital gains tax and long term capital gains tax. When you sell stock, mutual fund or bonds (a capital asset) for more than what you purchased it for that is considered a capital gain. Short term capital gain happens when you sell something that you owned for one year or less. Long term capital gain happens when you sell those capital assets you owned for more than a year.

Great article that breaks down the tax brackets: investopedia.com/articles/personal-finance/101515/comparing-longterm-vs-shortterm-capital-gain-tax-rates.asp

Important: you only pay taxes on the gains, not on what you put in!

5:40 - What kind of fees are involved with a brokerage account
Varies depending on who you open a brokerage account with.

6:16 - Vanguard Brokerage Accounts are AWESOME!!
I have a brokerage account with Vanguard that I'm using to fund a down payment. There might be fees to use the platform plus fees on the individual funds you want to invest in.
VBTLX Vanguard Total Bond Market Index Fund - Expense ratio is 0.05% annually
VTSAX Vanguard Total Stock Market Index Fund - Expense ratio is 0.04% annually
No account minimum, no trading fees
$20 annual fee if the account balance is less than $10,000. But Vanguard says they'll eliminate the fee if you use e-delivery to receive your statements online.

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