Brokerages charging nothing

Q I'm a new investor looking to open a brokerage account. Do I need to save up a certain sum to do so?

— C.K., Amherst, Massachusetts

A In the recent past you might have needed, say, $2,500 to open a regular, taxable account (versus an IRA account, which was often free). But these days, most of the big brokerages are offering $0 account minimums — and, frequently, on top of that, $0 trading commissions.

Since you're new to this: Read up on investing, learn about mistakes to avoid (such as trading frequently and buying penny stocks), and aim to hold great stocks for the long term. You can read reviews of good brokerages and compare them at both StockBrokers.com/ compare and our site, TheAscent.com.

Q What's a “business model”?

— D.H., San Ysidro, New Mexico

A It's the way a business makes its money. For example, you might think that CocaCola's business model is making and selling sodas, but it actually just makes the syrup and lets bottling companies do much of the heavy work. Many printer and razor makers don't make much on their printers or razors; instead they focus on selling lots of ink and blades, respectively.

Similar businesses can have very different models: A traditional furniture company may sell costly, handmade bookcases, while Ikea can charge much less for mass-produced bookcases (and sell many more of them) by shipping them unassembled and in flat, stackable boxes.

Some other (of many) business models feature direct-to-consumer sales (Girl Scout cookies), subscriptions (Microsoft's Office 365), franchises (McDonald's), advertising (YouTube) and peerto-peer transactions (Airbnb).

When studying a company, it's well worth spending time figuring out its business model's risks and advantages to see how attractive it is.