Especially if you’re investing to supplement your regular income, it’s important to know how easy it is to move money in and out of your brokerage account. If you’re looking to employ a more set-it-and-forget-it strategy, being able to withdraw funds may not be as big of a concern. Still, life often throws us things we don’t expect, so it’s prudent to review the deposit, withdrawal, and funds settlement terms of any brokerage you consider.
How can you deposit money into your brokerage account? Find out if you can deposit funds via check, ACH transfer, wire or credit card (this isn’t necessarily recommended, but it may still be an option).
Make sure you verify whether or not there are any fees associated with these options – though most brokerages don’t charge for deposits.
How long does it take for deposited funds to settle? If you’ve spotted an amazing trade entry but you don’t have enough cash in your account to execute it, settling times will suddenly become very important. Verify how many days it takes for deposited funds to be available for investment.
Settlement times may vary depending on the source of the deposit. Note that you may see longer settlement times if you maintain a low balance or don’t trade very often.
Does the brokerage offer regular checking or savings accounts that can facilitate swifter transfers? Are they free? Are they FDIC insured? If so, it might be easier to leave funds in a linked banking account so that they can be moved more quickly to your brokerage account if and when you need to bulk up your investment account.
How long does it take funds from the sale of your investments to settle? Make sure you check on settlement times for the different types of securities you will be trading.
What about dividend or interest distributions? How quickly are those funds available for investment? For withdrawal?
How easy is it to withdraw funds from your brokerage account? Find out if you can withdraw via ACH transfer, wire or check and how long it will take for those funds to reach your bank account. Also, check to find out if there’s a fee for withdrawal.
Does the brokerage offer the option of a debit or ATM card attached to your account? Sometimes this is offered for a brokerage account, and other times you need to open a linked checking or savings account to access this option. If you do have the option of a card, find out which ATMs can you use and if there are any fees associated with card use.