closing an account is not complicated but it requires some planning
When you switch online brokers, don't sell your investments - transfer them over.
- You won't have to pay transaction costs.
- You also avoid the risk of prices moving between the time you sell the fund in one account and buy it back in another.
- Importantly, there are various limitations / penalties on selling and buying again the same security in registered accounts. In taxable accounts, when you sell a security with a gain, you have to pay income tax - for some investors this makes sense but likely doesn't when you're starting out.
First open the new account. Test-drive it first - if you like what you see, complete the transfer.
There will likely be a transfer-out fee of around $100-130.
- Always check with the new broker - they may be willing to pay it because they're getting a new client.
- Consider waiting for promotions that move accounts without fees.
Be prepared that the transfer may take some time. Transfer mistakes have been reported so you need to stay on top:
- Ask both brokers how long they expect the transfer to take.
- Advise that you'll check in after, say, one week to make sure that the transfer is progressing as expected.
- Keep checking once a week until it's completed.
- Make sure that your new account is properly set up and that your investments / cash from the old account have all been transferred.
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Only close the old account only when your new account is fully functional.