Many of my clients ask me, “How do I set up an investment account?” Once you have your budget in line with your values, opening an investment account is the most important step to take to set your future self up for success. With that in mind, I wanted to make this step-by-step guide to opening an investment account. First, let’s walk through what an investment account is and how it is set up!

The What and The How

An investment account is a type of account that allows you to purchase investment vehicles, like stocks (or equities), bonds, real estate, mutual funds and more. The account allows you to purchase shares of these investments that will grow over time and can be used later on, like in your retirement. Take a look at the infographic below for the basics on how these investment accounts are structured.

How do we make investing fun? Comparing it to files obviously! Who doesn’t love office supplies?

Now that we’ve gone through the different elements of an investment account, let’s open an investment account for you!

Where Do You Want to Open an Account?

There are a vast number of Brokerage Firms where you could open an account. Our personal funds (outside of my employer 401K) are invested with Vanguard since they are well known for their low fees, particularly with their index funds. Fidelity and Charles Schwab also have historically low fees (but maybe add a few of the more expensive companies for anyone googling their names).

What Type of Account Do You Want to Open?

There are several different kinds of investment accounts that you can choose from. I will only go over how to open a Roth IRA account through Vanguard here for now, but check back soon to learn more about different types of investment accounts in detail. A Roth IRA is an individual retirement account where contributions are made from after tax money. What I like about this type of account is that your contributions and any gains will all be tax free when you pull the money out of the account! On top of that, once your account has been open for more than 5 years, you can withdraw your contributions at any time with no penalties.

What Do You Want to Invest Your Money In?

Once you’ve made this new investment account, you will have to make your first contribution. For discussion purposes, let’s say that you’re going to invest $1,000. When you first contribute your money to the Roth IRA, it will sit in a settlement fund until you pick where you want this money invested. The money you deposit into the settlement fund is NOT invested and NOT earning any interest. The money must be moved into an investment vehicle (or fund) from your settlement fund.

Vanguard has hundreds of funds to pick from. For this example, we will fund a Target Retirement Fund 2055 (VFFVX). What this fund means is that the percentage of investments (allocation) are balanced towards someone who would be retiring in the year 2055. This takes the extra effort of manually monitoring your allocation within this account out of it for a very nominal fee of 0.15%. This is still much less than the 1% usually required for actively managed funds.

Now that we have the basic questions covered, let’s do this. In the next 15 minutes, you could be setting yourself up to have over $500,000 in the next 30 years.*

*Assumes: 5% real return in today’s dollars and $500/month contribution over the next 30 years.

Let’s Open a Roth IRA with Vanguard!- Step By Step

Step 1: Pick your Brokerage Firm. For now, we will use Vanguard (not sponsored).

Step 2: Create your use profile. I won’t go over this part of the process here, but please let me know in the comments if you need help with this.

Step 3: Go to Open an Account.

Step 4: Select Start your new account. You can also rollover existing funds from another brokerage firm.

Step 5: Select Electronic bank transfer or another Vanguard account in order to link your bank.

Step 6: Check that you have all required information before moving on. You’ll need your employment data for this next step, as well as your bank information so you can transfer money into your new account.

Step 7: Choose your reason for investing and Roth IRA. For this exercise, we’ll use Retirement. Ideally you won’t need to touch these funds for a long time and can let them grow in peace; however, one benefit of a Roth IRA is that if you need to, you can pull your contributions from this account early.

Step 8: Enter the source account for your funds that you wish to put into this account. You can change the source account at any time in the future.

Step 9: Verify that this is not a rollover. If you are rolling funds over, there will be different instructions. Also, state how much you want to deposit into the account for each year. The current maximum contribution is $6,000 in Roth IRA accounts for each person. You can invest in the prior years’ account up until the tax day of the current year as long as the account was opened by December 31st of the prior year.

Step 10: Set up reinvestment of your dividends and capital gains. This prevents a taxable event AND grows your investment even faster.

Step 11: Review and submit all of your information.

Step 12: DANCE! Your new Roth IRA is OPEN. Now let’s purchase investment funds using your new account. It’s just another few minutes!

Investing in Your New Account- Step By Step

Step 1: Under My Accounts you will find Buy and Sell. Select this option.

Step 2 Select Buy funds.

Step 3: Click Add another Vanguard Mutual Fund. If you don’t know the name, symbol or number of the fund you want, select from a list of funds.

Step 4: For this exercise, we will pick the Target Retirement 2055 fund (VFFVX). This fund has a minimum initial investment of $1,000, which is the lowest that Vanguard offers.

Step 5: Add a minimum of $1,000 to the new fund and select continue. If you were saving $500/month towards this goal, you would need to save two months’ worth of funds in your settlement account before making your first fund purchase.

Step 6: Choose the origin of your fund purchase. Select your settlement fund for where the money is coming from. Moving forward, you can set up fund purchases from your checking account.

Step 7: Select Accept to the ability to receive your fund prospectus (the details) electronically. SAVE THE PLANET!

Step 8: Review and submit! You’ve just made your first Roth IRA investment! Grab yourself the drink of your choice and celebrate.


You just set up an investment account and set yourself up for success over the course of the rest of your working career. If you are able to contribute the maximum of $500/month, you’ll have over $500,000* in addition to any other investments (401Ks, etc.). That’s over $1,600/month that you would not have had before.15 minutes for $500,000 is a pretty good paycheck. Kick back and celebrate your success!

*Assumes: 5% real return in today’s dollars and $500/month contribution over the next 30 years.