One of the first lessons you will learn about online investing is that things never seem to be straightforward. A classic example of this is the way in which funds are deposited and withdrawn from the programmes you join.
Spawning of an Industry
If you were to open an account with an online stock or forex broker more often than not you would be able to deposit and withdraw funds electronically into your personal bank account. Usually this is quick and often free.
Other types of online investing programmes can’t use that method and I assume this is because banks want to keep their distance as they don’t fully understand them (with justification in some cases). This has meant that alternative funding arrangements have had to be created. Enter the online payment processor.
If you intend to take advantage of the higher returns offered by these online investing programmes you will need to make sure that you open accounts with several payment processors, sometimes known as e-currency accounts. Bear in mind that many programmes do accept bank wires but this can be costly and time consuming although some people are happy to go this route.
Opening an Account
Let’s say that you decide to open accounts with online payment processors, what does this mean in practice? Well the first thing you need to be aware of is that some form of ID and address verification will be needed. There is no getting away from this so make sure you have electronic copies of your ID and at least one recent utility bill or bank statement available for this purpose.
Opening an account is generally very easy and once you submit the verification details it doesn’t take long to set one up. Companies that offer this service include:
- Liberty Reserve
- Global Digital Pay
- Perfect Money
- Solid Trust Pay
The list above shows the major processors but there are others available. It is always worth checking with the programme you intend to invest with just which payment processors they accept.
So once you have an account set up with a payment processor is it then possible to make deposits and withdrawals easily? The answer to that is not necessarily so. Even if you have a payment processor account you may not be able to fund directly (although again bank wires are usually possible). What you may now need is an e-currency exchanger account. Here you can transfer funds from your bank account, and have them converted to one of the payment processor e-currencies.
Examples of these companies include:
- London Gold Exchange
- Vela Exchange
Of course all of these companies have to make a profit to trade so there will be charges involved, it is outside the scope of this article to go into detail about specific charges but you should make sure you understand what the charges are for depositing and withdrawing funds. Whilst it may seem an expensive overhead if you think about it the potential profits to be gained will soon recoup the costs involved.