An account happens when you deposit money (legally) into a registered investment account at a known financial institution. An account comes in many flavors, the most sweetly vanilla of which are your basic and checking and savings accounts at a bank like Wells Fargo, Bank of America, Bank of Uzbekistan. A spicier flavor of an account type is a margin account, usually held in the form of stocks deposited into a stock broker's margin account.

Why is margin good? (And it has nothing to do with butter.) It's good because you can borrow in most systems up to 50% of the value of the securities you have in that account. Since the various terrorist acts of modern times, the level of inspection, disclosure, and legal strictures has increased dramatically, so if you have an actual registered-for-realz account, expect that you are sending loving letters to the NSA every time you trade.

Related or Semi-related Video

Finance: What Does it Mean to Churn an A...14 Views

00:00

Finance allah shmoop What does it mean to churn an

00:05

account All right Well back in colonial times before america

00:10

was the good old u s a You know what

00:12

That i po and seventeen seventy six colonists would churn

00:16

cream into butter back then churning involved moving a plunger

00:20

in a wood bucket over and over and over again

00:23

Really good for the traps and lattes there Not exciting

00:26

but well that's What happens when there's No better technology

00:29

today churning is something illegal that stock brokers dio and

00:34

remember normally brokers pay their own rent by getting paid

00:38

a commission off of each trade they do for customers

00:41

So churning in the financial sense here means that stockbrokers

00:45

are making tons of trades they really don't need to

00:48

be making in a client's account in order to generate

00:52

mohr commission for themselves they're churning the account to generate

00:56

dough for themselves Illegal very bad And sometimes it can

01:01

be difficult to detect or stop You know think about

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little old ladies not really paying attention to our account

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or ah cardiologists who really has no idea how wall

01:10

street works They have no idea of the brokers churning

01:12

Or not Well if you fall prey to a broker

01:14

who's involved in churning you'll end up overpaying them in

01:17

commissions And you might even have to pay extra taxes

01:20

because they realized gains from all those trades they didn't

01:23

need to make But if that brokered does get caught 00:01:26.979 --> [endTime] yeah he's toast

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