How To Move Cash To Your Broker
In order to fund your broker account you need to send them money using one of a few methods. These are the typical methods used that brokers support.
Checks Or Account Transfers
If you are getting started to investing, I recommend using a physical check issued from your bank or credit union. Deposit the check either by sending it in the mail or visiting your broker at their local office in your area. Make sure that the money is in the account that the check is drawn from before you send it and that there isn’t any possibility of the money being withdrawn by other claims (bill payment, bank fees, etc.)
Some brokers offer banking services so you can simply transfer funds from a linked bank account to the broker account. You will need to establish the link between the accounts. This is a good way to transfer funds because it will occur instantaneously so that will minimize the likelihood of a “bounced” check.
Wire transfers have been available as a means to transfer funds for decades. Wire transfer is a method to transfer funds electronically, and establishes a link between your bank or brokerage account and your broker account. A wire utilizes the Federal Reserve system to transfer funds and usually requires a few from the sending institution (some banks or brokerages may waive the fee depending on your relationship with them).
In order to setup a wire, you’ll need your bank information including account number, account type (e.g., checking or savings) and ABA number (typically the first series of numbers on your check under the memo line).
ACH transfers are by far the easiest and least costly way to transfer money. They work just like a check drawn against your checking account or savings account but use the electronic checking highway to transfer the money. The way to do this is to setup an ACH transfer interface with your bank or credit union. So, when you want to fund your broker account, a “Pull Transaction” will be initiated from your broker to your bank.
ACH transfers work fast, same day. Make sure that when you initiate the transaction that the money in the bank account is available and free from any other potential use. Brokers can and do move the money the same day. Some brokers will even consider your ACH transfer as “same day”, e.g., you go on margin and you want to cover your investment order. (TDAmeritrade does this, while other brokers such as OptionsHouse hold your ACH transfer for 3 days).
Another thing to keep in mind is that due to Federal Money Laundering laws, transactions in excess of $10,000 may incur additional lag due to filing requirements. Zecco, e.g., has in the past held transfers for a few days while smaller amounts go through the next day.
ACH Transfer Security
In order to verify the ACH transfer interface request is actually from the owner of the bank account, brokers use a system called, Micro Deposit Verification. Micro deposits are two small test deposits placed in your bank account to verify your bank instructions submitted through electronic funding (referred to as ACH). After submitting your electronic funding bank instructions, micro deposits will appear in your bank account within 24 to 48 hours.
Once these are deposited, you return to your broker to confirm the actual amounts deposited. This confirmation verifies that you are the owner of the account and have authorized the ACH transfer interface.
Here’s a visual from OptionsHouse that describes the process.
Getting The Account/Routing Numbers
Both wire transfers and ACH transfer requests use ABA routing and account numbers to process transfers. The ABA routing number is a unique number assigned to your bank or credit union. Your account number is also printed on the check which ties your account to the bank. When you need to fill out these two numbers at your broker the easiest way to do this is to copy them from checks attached to your bank account. Here’s a visual image that shows where these two numbers are on your checks: