Information on Brokerage Accounts
A brokerage account is a financial account held on behalf of investors at an investment bank or brokerage firm. The funds within this account are used to buy and sell securities, annuities and other investment products.
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Cash Management Account
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A cash management account is a type of brokerage account into which actual money is deposited. The money held within this account is used to make cash transactions.
Discretionary Account
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An investor who has a strong relationship with a brokerage that completely understands his financial goals may choose to open a discretionary account. With this set up, a broker may make transactions without the prior approval of an investor.
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Margin Accounts
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A margin account is a line of credit that allows investors to make transactions using money borrowed from the brokerage. Margin purchases are heavily regulated by the Federal Reserve.
Online Brokerage
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Online or discount brokerages are becoming more common among individuals who make their own investment decisions. While this option offers less customer support than others, the service fees are lower.
Credit Card Funding
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Although some brokerages allow investors to use credit cards to fund these accounts, cash is usually the preferred method, with investors making a physical deposit or through wire transfer from another financial institution.
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