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Q: Investment accounts that allow debit card access? Sub accounts? ( No Answer,   5 Comments )
Subject: Investment accounts that allow debit card access? Sub accounts?
Category: Business and Money > Finance
Asked by: nyreefer-ga
List Price: $150.00
Posted: 28 Jun 2006 10:44 PDT
Expires: 28 Jul 2006 10:44 PDT
Question ID: 741768
I am looking for an investment account with (hopefully) a discount
firm that allows Debit card ATM access directly to the investment
account.  Most firms I have tried seperate the investment and banking
business (ie. Etrade, Ameritrade, etc)- you cannot use your debit card
to directly access your investment account.

Second part- The same firm would also allow sub accounts (which would
have the right to a certain % of the parent account's money).  For
example a Main account would have sub-accounts A, B, C & D, each
holding the equivalent of a set % of the market value of the Main
parent account, based on the individual's investment of the sub
account. I have not found a firm that can divide up these accounts
like this (ie Etrade, Ameritrade, etc.)

Basically I am setting up an investment group where 10 friends are
getting together to pool our money and make investments together
(commodities will be held, as well as equities).  However we need
debit card access to these accounts, this is a non-issue and has to be
in place.  Each person will contribute their own money, so each would
have the entitlement to that proportional % of the total pooled

As a person withdraws cash using the debit card, their % entitlement
of the total assets will decrease accordingly (though they would be
able to deposit more as they wish, increasing the % share again).  The
cash would then sweep from the main account to cover the withdrawn
amount.  No one would be able to withdraw more then their correct %
from the account.

If there was not enough free cash in the main account to draw from,
ideally the account would know which items to sell in order to free up
the cash (based on a basic hierarchy).

Sub-accounts are not neccassary as long as there is a way to put a
limit on the amount the individual could withdraw from the main
account.  This would change dynamically with the market value of the
Main account, and would be based on a percentage of the main account. 
As the market value of the Main fund rises/drops, so too will the
value of the individuals entitlement.

Leverage will NOT be used. No shorting will be done. 

Might sound complicated, but its not:
1) Debit card access to invesment accounts
2) Sub accounts based on % of contribution
3) Low trading rates, as assets will need to be sold frequently to free up cash
as members withdraw funds.
4)Ideally the trading to free up cash would be triggered automatically.
5) The ability to see each individuals % value (especially if they go
into the red- for example they withdraw money after hours, then the
value drops next open) would also be needed.

I have tried Trade Station- they do not offer debit card access to
their accounts.  They also charge an arm and a leg per sub account and
have an extremely high minimum account balance.  I do not want to have
to add funds if the value drops below a certain threshold.

Please do not answer this question quickly (and a 'this is not
possible' is not acceptable).  Only detailed productive answers
regarding a specific investment company with which I could do
business,  an estimate of costs, legal issues, infrastructure, etc.
(or how to go about this if a specific company is not available)-
would be acceptable. Basically what I would need to set something like
this up.

There is no answer at this time.

Subject: Re: Investment accounts that allow debit card access? Sub accounts?
From: ubiquity-ga on 28 Jun 2006 11:17 PDT
This is not an answer to your question, but you may have securities
law issues that need to be worked out. I would find myself a good
securities attorney before I proceed with your investment club/ pooled
vehicle fund or whatever u want to call and intend to form it as.

By the way debiting money out of an account is problematic in the
sense that unless you want to pull money out of a cash reserve portion
of an account, how does one decide which investments to liquidate  (or
worse loan you the money on margin)?  If they do it prorata by all the
investments, the transaction costs can be very large, especially for a
relatively small withdrawal.  if the broker has discretion, then all
the sudden  he becomes an investment adviser under the IA Act of 1940.

In sum, think through the mechanics of how this is supposed work.
Subject: Re: Investment accounts that allow debit card access? Sub accounts?
From: nyreefer-ga on 28 Jun 2006 12:55 PDT
thanks for the comment!  

in terms of the withdrawals- there would be a specific asset sold off
to raise cash, there would be no discretion involved.

I know this could probably be done using a sophisticated program such
as Tradestation to automate the flow of funds- but the debit card
issue comes up here (they are not a bank and do have debit card built
into their structure), as well as the sub accounts.

With the deep discounts a place such as Tradestation would give (< .01
cent a share to buy/sell) I would not be too concerned about
transaction costs.  We would not be able to do this using a higher
priced broker unless it was a fixed monthly cost with unlimited

I had thought of the possibility of each card itself being linked to a
percentage of the assets, without using sub accounts.

Also, a way to link an online checking account with an account similar
to the structure TradeStation would give? As the individual withdraws
money out of the bank, say overdraft protection automatically sweeps
the funds from the investment account?

Or (probably getting a little silly here) overdraft protection linked
to a main credit card - which is then paid off (daily, weekly) with
assets manually sold from the Main account? hmm...thoughts on that?

Thanks again, any help is greatly appreciated!
Subject: Re: Investment accounts that allow debit card access? Sub accounts?
From: nyreefer-ga on 20 Jul 2006 12:35 PDT
No one can help?
Subject: Re: Investment accounts that allow debit card access? Sub accounts?
From: pafalafa-ga on 27 Jul 2006 04:52 PDT
You may find the brief discussion of 'unanswerable' questions -- yours
included, I'm afraid -- to be of interest:
Subject: Re: Investment accounts that allow debit card access? Sub accounts?
From: myoarin-ga on 27 Jul 2006 15:04 PDT

"...(and a 'this is not possible' is not acceptable)."

For a price, maybe anything is possible, but you are asking for
something that will require the company managing the investment
account to handle accounting matters that are just not normally
provided.  To set up what you are desiring would require a complicated
descriptive contract, AND THEN the company would have to establish
special controls to assure that the contract was followed.
It is unlikely that a company would want to do this, perhaps also
because it would anticipate problems of being responsible for an
account for ten friends.

No discount house will do this; their principle is "simple and straightforward".

In case you don't know, debit card charges are debited to an
investment account's cash balance or a daily money market funds
account.  If this is empty, the debit overdraws the cash account, a
loan secured by the investment account, if you will, "margin".

"If there was not enough free cash in the main account to draw from,
ideally the account would know which items to sell in order to free up
the cash (based on a basic hierarchy)."

I think this would be possible only if you and your friends agreed to
totally managed account, where the advisor was given full authority on
investment decisions.

Just a personal comment as a retired banker:  investment funds should
be segregated from funds available and necessary to cover ongoing
What you are suggesting doesn't do this.  You are anticipating that
ongoing expenses via debit cards could result in sale of securities. 
This would undermine the principles on which investments were
originally made.
If the investment pool is to remain viable  - and the ten friends
remain friends -  they should not put so much of their funds in the
pool that they do not individually have cash available for their own

Adhering to this principle  - which any investment councellor would
recommend -  would avoid all the problems that your concept involves.

Sorry to be such a wet blanket.
Regards, Myoarin

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