Definition of Stock Investment Accounts

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A stock investment account is one in which the person who has opened the account plans to use the stock. Learn about the amount of margin that a company can lend for a stock investment account with help from a personal asset manager in this free video on investing in the stock market and money management.

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Video Transcript

Hello, I'm Roger Groh with Groh Asset Management. Today we're here to talk a little bit about what are stock investment accounts. Have you opened up a stock account at a bank or a brokerage firm or investment management company over the last ten years? Well when you fill out that application one of the line items in there is going to be, what do you plan to do with your money, how do you plan to invest it? Did you plan to buy bonds, which would be a bond investment account, do you plan to do options, which would be an options account, or do you plan to use stock? If you are using stock then that qualifies as a stock investment account. Now the difference is the amount of margin that the company can then lend to you on that investment. Also they will then look at the quality of the holdings that you have in that portfolio, and the volatility of the holdings that are in that portfolio and begin to rate you for how much money that they will loan to you and also the rate that they will loan you money for. Spreads are huge in here, they can be as low as 3 percent, it can be as high as 20, it really is up to the brokerage firm and the quality of the companies that you begin to buy and also the credit worthiness of your own credit check. So that's a little bit about what stock investment accounts are. Now they do differ per country, meaning if you were to buy- use a stock investment account in China, well there may not be any margin available to you in China. If you were to use stock investment accounts in France, mutual funds may be the only way that you can go, as there may not be common stocks that you can buy. Certainly if you're in Singapore, Vietnam and some of the smaller markets around the world, generally mutual funds make up the majority of the items that you can buy as oppose to common stock. But nonetheless the funds are regarded as stock within a stock investment account. Also electronically traded funds, ETF's, are also regarded as stock when it comes to stock investment accounts. So I'm Roger Groh, and that's a little bit about stock investment accounts, what they mean and how you can use them.

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