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By admin | November 27, 2010
Online Investing - Opening Your First Online Account
The commercials on TV make it appear so easy - open your investment account, begin trading that day, and in no time, you`ll be capable to withdraw a millionaire. Well, online investing is easy - but it isn`t quite that easy.
The online companies don`t say you that there`s an application, and an account approval period that can be quite frustrating for a newbie to online investing.
The Online Investing Account Application
Common sense tells you that online companies are leaving to ask your name, address, phone number, etc. but you might be surprised at exactly how much information they do want to know.
For example, they`ll take your birth date, social security number, employment information, liquid net worth, total net worth, annual income, tax bracket, and often more.
Why do these online investing companies need so much information? One cause is that they are needed by law to control your identity. Following the events of 9/11 and the transition of the Patriot Act, the administration has called upon financial service companies to help stem the course of money to terrorist groups.
In practice, this is naught but a big trouble for the 99.99 percent of people engaged in investing who take naught to do with terrorism. It depends on your political opinion as to whether or not it`s all worth it.
Regardless of your political views, the fact is that the Patriot Act is the law, and because of it online investing companies will go to great lengths to control your identity. For example, if you`re a married woman who has lately taken her husband`s surname, investing companies might hold the blessing of your account.
You will take to try to them beyond a trace of a question that you are who you say you are, and this is sometimes more hard than you would presume.
Different Levels of Empowerment For Online Investment Accounts
Did you recognize that your credit history comes into play when you need to give an online account? This is because some forms of investing pose a financial risk to online investing companies. For example, when you buy on margin, you are borrowing money to buy stock.
If you receive less than stellar credit, online companies may deny you the use of margin. Furthermore, shorting stocks (selling stocks which you don`t own in the trust that they will decline in value, and so buying them back at a late date) also poses risk for online investing companies.
What happens if you short 100 shares of a fund that`s trading atand it goes to 0? Do you have 0,000 to buy back the blood? If not, then the investment company loses, so if you have poor credit or limited liquid net worth, you may be denied the good to sell short.
More worrying is the thought that online investing companies can set you from doing things that don`t directly pose financial risks to them. For example, buying call and put options poses no risk to an online broker, but the party may even deny you the good to buy options on the evidence that you lack experience.
Why should the online company care? Because theoretically, you could sue them for not protecting you from yourself - blame the trial lawyers for this one.
Don`t Be Scared Off
The immense bulk of people who desire to give online accounts are capable to do so with comparatively little trouble. Some people, however, get a lot more of a bother than they buy for. T
he important matter is to be inclined to expose a lot of information, and to hold while your account application is being processed. The more you know going into the situation, the less frustrating it will be.
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