March 30, 2022

How to explain brokerage accounts to kids

Onu ABCs

Investing can feel intimidating, but we're here to simplify it a bit. Your investing journey starts today!

A brokerage account is an investment account where you can deposit money to buy stocks, bonds, mutual funds, and ETFs. Your brokerage account will keep track of your gains, losses, dividends, and more! The company who helps keep track of the different things that you own is called a brokerage. Because it is so complicated, the government has a lot of rules and regulations to make sure brokerages are always protecting their customers.


A brokerage account is an account that is used by a person who wants to invest in securities like stocks, bonds, and mutual funds. Choosing a brokerage firm and an investment account can be stressful since many options are available. It is essential to explore what is out there before settling on one.


  • Stocks 
  • Bonds
  • ETFs


A stock is a little piece of a much bigger company. Imagine that a company is a castle made out of Legos. A stock is like one Lego piece in that castle: When you buy the stock, you own that piece of the company. 


A bond is like an "I owe you" (IOU) from a company or government that can be traded on the market. When a company needs money, it can sell bonds to people like you and me. They "borrow" this money from you, hoping that your investment can help grow the company. You make money if they pay you back with interest over time. The interest rate on each bond is different. More risky bonds have a higher interest rate, since it is more likely that they won’t pay back on time and lenders need to charge a higher rate to make up for potential losses.

Exchange-traded Funds (ETFs)

An ETF is a way to easily invest in multiple companies at once that usually focuses on a theme like “the car industry”. You pay a small fee to a company that monitors the performance of the ETF and researches the industry or region the ETF is focused on.

Sign up and Build a richer future for your children

For a limited time, when you sign up we’ll gift you five free diverse investments to get you started.


This information is educational, and is not an offer to sell or a solicitation of an offer to buy any security. This information is not a recommendation to buy, hold, or sell an investment or financial product, or take any action. This information is neither individualized nor a research report, and must not serve as the basis for any investment decision. All investments involve risk, including the possible loss of capital. Past performance does not guarantee future results or returns. Before making decisions with legal, tax, or accounting effects, you should consult appropriate professionals.