RetroGamer

An investment account is maintained with such financial institutions as banks, brokerage houses, or even insurance companies. The main purpose of this account is capital preservation and growth, as well as fixed-interest profit through long-term deposits in the asset portfolio.

In general, "investing" means a proactive use of assets in a very broad definition - such as patents, trademarks, rare wines or gold coins, but also small businesses, real estate and antiques. In this regard, the investment account contains fewer physical assets: cash, stocks, bonds, and mutual funds. The basic investment objective remains the same – to buy the asset and hold it for the long term, and to sell it at some point in the future when the asset's value is cheaper. Depending on the asset you have decided to invest in, you need to evaluate your investment as a long-term process as you will have to wait for the particular asset to appreciate in value.

Investment Account Features
Before opening an investment account, you should consider whether or not this type of financial service is best for your risk/return. Furthermore, liquidity preferences embody your goal. Investment accounts are usually maintained with long-term goals. Traditionally, the long term is considered to be 7 years or more, but this number should not be the primary determinant when deciding whether or not to open an investment account. This banking service is often used when there is a specific event in your life that requires a higher income, such as a wedding. For example, if you are sending your child to college, buying a house, or approaching retirement.

Since one of the main determinants of the investment account is its long-term nature, you should be ready to face another attribute of it - liquidity. Any financial instrument has less liquidity compared to cash in your checking or savings account. Additionally, this type of deposit usually comes with higher transaction costs in case you want to access the cash sooner than a specific time specified in the agreement between you and the financial institution.

Types of investment accounts
If you have decided to open an investment account, the next step is to find a bank or other financial institution that can offer you the most suitable type of investment account regarding the costs, risk level and other components. There are various kinds of accounts designed for different needs and wishes of investor, but not all banks offer such services.

Brokerage account
This account is managed by the investor himself. Usually, after depositing cash on this account, you can use the funds to purchase different financial instruments or other types of investments. This account involves a commission paid to your broker for executing your purchase and sell orders. If you feel uncertainty regarding your investing skills, you may use full service brokerage account, which would also include investment advices.

Retirement account
This account is designed for long term continuous deposits over the years of employment, which results in higher income during retirement in addition to the state pension (if applicable in your country – ask us). In several countries, deposits in the retirement account are not tax applicable.

Custodial / guardian account
These accounts are designed for investors, who want to save funds for their children or other person. This includes savings made for a child’s education.

Specialty account
This type of account usually includes testamentary or non-testamentary trust accounts. In case of a non-testamentary trust account financial instruments are registered on behalf of the trust, while managed by a trustee. Meanwhile, a testamentary trust is opened through the testimony of a deceased person.

Business account
Business account works similarly as brokerage account, while the client is a business instead of a private person.