Initial deposit

From CEOpedia | Management online

Initial deposit it is a minimal amount of money needed to open a savings or investment account. It is something like a down payment to open an account.

Initial deposit means funds placed with a broker by a trader, as protection for taking on trading positions at the moment on opening an account or when they actually enter a trading position for which is needed a margin deposit. Usually, online forex brokers require an account only a low initial deposit for trades to open an account.

Deposit transaction

The first deposit transaction between a depositor and the branch may be placed into different types or time. Deposit accounts may be added together for the purposes of determining the dollar amount of the initial deposit, if that are held by a depositor in the same right and capacity. Domestic retail deposit activity means an assent by a State branch of any initial deposit of less than $100,000 [1]. The initial deposit was determined by branches established before September 17, 1978. It is very important to determine whether the deposit was opened with an initial deposit of US$100,000 or more. The state branch that has been established have to deal with this inspection. Deposit accounts, which are kept by the depositor at the same right and with the same power, can be added to establish a balance.

Mutual funds

Most mutual funds require an initial payment of between 2000 and US$3000. This amount is often lower in the case of individual retirement, but can still amount to US$1000. If you have the money to make such an initial deposit, the choice of investment funds is quite wide. Unfortunately, many of people do not have an additional US$3,000. But it is not a big problem because there is still many different ways to enter the market. One of them are investment funds that will allow everyone to open an account for several hundred dollars. They have low entry points, but there is a lot less, so the choice is limited. Many mutual fund controllers allow the initial deposit to be used as a criterion during audits when looking for investment funds[2].

Payment schedules

The initial deposit is also one of the financial categories in the payment schedules. If initial deposits are required as soon as the sale agreement is accepted, the initial deposit amount should be sufficient to cover all contingent costs and liabilities. Examples of such costs may include:

  • suspension of the contract,
  • potential liability for termination of the contract

Implementing agencies are expected to carefully monitor the accuracy of payment schedules in all cases. This ensures that cash is available when there is a need to pay[3].

Examples of Initial deposit

  • Opening a bank savings account: Many banks require a minimum initial deposit of $50 to open a savings account.
  • Investing in stocks: Brokerage firms often require a minimum initial deposit of $500 to open an investment account.
  • Purchasing a Certificate of Deposit (CD): Banks typically require a minimum initial deposit of $500 to open a CD.
  • Investing in a mutual fund: Mutual funds often require a minimum initial deposit of $1,000 to open an account.
  • Opening a retirement account: Retirement accounts often require a minimum initial deposit of $2,500 to open an account.

Advantages of Initial deposit

An initial deposit is a sum of money that must be deposited into a savings or investment account to open it. It can be a great way to save and grow money if done correctly. The advantages of making an initial deposit include:

  • Easier access to funds: Having money in the account makes it easier for the account holder to access and use those funds when needed.
  • Greater return on investment: An initial deposit can often help to increase the interest rate on the account, resulting in a greater return on investment over time.
  • Higher levels of security: An initial deposit can help to secure the account and protect the account holder’s money from theft or fraud.
  • Increased financial stability: Having money set aside in an account can create a financial cushion for unexpected expenses or emergency situations.
  • Tax benefits: Certain accounts may offer tax benefits that can help to reduce the amount of taxes owed, allowing the account holder to keep more of the money they earn.

Limitations of Initial deposit

An initial deposit is a required minimum amount of money that must be deposited in order to open a savings or investment account. There are several limitations associated with initial deposits, such as:

  • It limits the amount of funds available to the account holder, as they are required to make a minimum deposit in order to open an account.
  • It can also limit access to certain investment opportunities, as some accounts may have requirements that necessitate a larger initial deposit.
  • It can also limit the amount of interest an account can earn, as some accounts may have an interest rate that is dependent on the amount of the initial deposit.
  • Finally, it can also limit the amount of withdrawals an account holder can make, as some accounts may require a minimum balance to remain open.

Other approaches related to Initial deposit

The Initial deposit is a minimal amount of money needed to open a savings or investment account, however there are some other approaches that can be used to fund an account. These include:

  • Transferring funds from an existing account - this method is usually used by customers who already have a bank account as they can easily move funds from one account to another.
  • Credit card payments - this allows customers to make payments using their credit cards, which then get debited from the customer's account.
  • Cash deposits - customers can deposit cash in an account, which is then credited to their account.
  • Direct deposits - customers can set up a direct deposit from their employer or another bank.

In summary, there are several ways to fund an account, including transferring funds from an existing account, paying by credit card, depositing cash and setting up a direct deposit.


  1. Code of Federal Regulations 1980
  2. Little K. 2012
  3. FMS Customer Financial Management... 2007

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Author: Weronika Wielochowska