Opening An Investment Account

by David Jenyns on September 4, 2009

Opening an investment account is rather like opening a charge account at a department store. There are several kinds of accounts available to you. The basic one is the cash account, which establishes you as a bona fide customer able to buy or sell. Joint accounts may be opened by a husband and wife. Margin accounts are an extension of the cash account, which permits the customer to buy on margin.

The broker’s commission is exacted on both sides of each transaction. The buyer pays his broker, the seller his. Commissions are based on the amount of money paid, or received, for each round-lot unit of 100 shares, or odd-lot unit of one to 99 shares, of stock priced at $1 per share or more.

A relatively new development permissible in 23 states, enables you to buy stocks for minors, you serving as custodian. It removes the necessity of establishing a trust, often an elaborate and expensive procedure, as was formerly the case, or, even more awkwardly, getting a court order appointing yourself your own child’s guardian.

Investment accounts are great choices for someone who is looking to see their money grow, albeit slowly, year by year.

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