BANK WITH A BROKER FOR A LOW COST PACKAGE DEAL Many stock brokers offer money management accounts (under various names such as asset management account, cash management account, etc.) which provide a whole package of services at a low annual fee. At a minimum these including a money market fund, checking and margin loan access. A margin loan is a loan secured by securities. It can be used to buy other securities, but it can actually be used for any purpose. Interest rates on margin loans are the one of the lowest cost loans you can get anywhere. Most of these accounts offer additional services such as a Visa or MasterCard (or sometimes American Express) as a debit card against your account balance. Charges are taken from cash or money market funds first, and then from an automatic margin if the loan exceeds the cash available. Money in the account is automatically invested in a money market fund until you use it -- thus dividends received on stocks in the account will have same day credit and earn interest. Using a credit card against a brokerage account as such may be reckless, but if you handle your money properly there are many advantages to these accounts. You can use the account as your principal checking account, keep most of your money invested, never worry about an overdraft, use your debit card as a plastic check (a blessing for emergencies in strange places where a personal check would be useless), and have all your record keeping done automatically. But the instant liquidity factor (through margin loans) can be a lifesaver in a major emergency -- no explanations, no credit checks, just write out a check for whatever it is that has to be done. Many of these accounts have a $20,000 initial opening balance requirement, but not all of them. Here are some of the more interesting ones: K. Aufhauser & Company Inc. offers the ProCash Plus Account. They are a deep discount broker. Minimum equity in the account has to be $10,000 -- that's equity, not cash, so you could transfer an existing portfolio of stocks or bonds. They offer a MasterCard which gives you access to cash at 76,000 cash machine's worldwide, free unlimited checking, and of course the margin loan access. Call (800) 368-3668 and ask for an information kit and account application. Charles Schwab & Company offers a similar service with no annual fee, but with a $5,000 minimum balance. They call theirs the Schwab One Account. They have branches in many cities, but if you can't find one locally, call them at (800) 442-5111. About 200 different no-load mutual funds can also be purchased and kept in a Schwab One Account. Fidelity Investments Discount Brokerage offers the Ultra Service Account with a $5,000 minimum and no annual fee. Call (800)544-6262 for information and account forms. Merrill Lynch was actually the inventor of this type of account, with the introduction of the Cash Management Account (CMA) nearly 15 years ago. That account has a $20,000 minimum. But they have two new versions. One is called the Capital Builder Account (CBA) with a $5,000 minimum. They also offer a business version called the Working Cash Management Account (WCMA) with a minimum balance of $20,000, and WCMA-II with a minimum balance of only $2,000, which could be perfect for your small corporation. (WMCA-II does not include a Visa card.) All of the Merrill Lynch personal accounts offer a Visa debit card (which can be used at 98,000 cash machines), checking, and of course, margin loans. They also can accept direct deposits, if you have an automatically deposited payroll or Social Security check. The Merrill Lynch accounts are also available for estates and trusts. Contact your nearest Merrill Lynch office for information and account application forms, or call them at (800) 247-6400. Another major advantage of these package accounts with brokers is the ability to leave mutual fund shares in them. That may not seem important, but if you have ever tried to quickly sell a mutual fund share directly you will appreciate the advantage of leaving it in the brokerage account. You may have realized that taking physical delivery of the mutual fund shares would create problems, and left the shares in a statement account at the fund. But did you ever read the fine print in the prospectus about redemption procedures? At the least you will have to get your signature guaranteed by a commercial bank, and submit the guaranteed redemption letter. A check will then be mailed -- in due course. Note that we said commercial bank -- a notary is not acceptable, nor is a savings and loan. With the asset management account from the brokerage firm, the shares are redeemed immediately and the proceeds placed in your account ready for you to access through any of the means the account offers. And they'll be earning interest until you do access them. If you own T-bills, there is an advantage in leaving them in one of these brokerage accounts. Not only do you have free safekeeping and ready delivery if you want to sell, but they are good for collateral of 90% of face value. This gives you margin call protection if you are trading stocks on margin, or you can use the T-bills to finance a fast stock trade. And you have an instant line of credit, accessible by check or debit card, should you need emergency money, or money for a business deal. When opening one of these brokerage accounts, always sign the papers for a margin account, even if you never intend to use it. There is no obligation to use it, but the whole point is to have the ability instantly in an emergency -- not a week or more after you've had to revise the account paperwork, which may have to be sent to the firm's head office. Flexibility is the word here. Send stock certificates unsigned by registered mail. That way they are not negotiable. Then in a separate letter, preferably not even on the same day, mail the broker a stock power form with your signature and the number of shares in the transaction, which authorizes the broker to sell the stock or transfer it into your account.