A Guide to Investment Accounts

Most of us agree that the sooner you start putting money aside for your future, the more opportunities you’ll have for growth. And, investment accounts can help you reach your goals faster. You don’t have to choose just 1 type. You can have 1 or any combination in your financial portfolio. Let’s talk about some different types of investment accounts.

Brokerage Accounts

A brokerage account is where you hold and trade your investments in mutual funds, stocks and bonds. Brokerage accounts are usually managed by industry professionals. You can get advice and services through licensed stockbrokers. They also can act as your agent in buying or selling. Another option is to find a digital service—where you can manage your own portfolio or have technology make your investment decisions.

Retirement Accounts

Although you may not have realized it, learn more about retirement accounts are investment accounts, too. The most common are traditional IRAs and Roth IRAs. They often have the same types of investments as a standard brokerage account. Both are known as tax-advantaged accounts. The difference is how and when you pay taxes. Many people choose based on whether they think they’ll be in a higher tax bracket now or when they retire. 

• Traditional IRAs: These are tax-deferred accounts. That means you get to deduct what you contribute to a traditional IRA on your tax return each year, but you pay taxes on your withdrawals at retirement. 
• Roth IRAs: You use your after-tax money to make your retirement contributions, so you won’t have to pay taxes on your withdrawals at retirement.
   

Education Accounts

Parents, grandparents and others who want to put money aside as a hedge against inflation and increasing higher education costs often open an learn more about an education account. Some like 529 plans and Coverdell accounts are tax-advantaged savings accounts. Some are set up specifically for higher education. Others can cover education expenses from kindergarten through college.

A financial advisor can help you decide how much to save and which option would work best for you. 

Custodial Accounts

Adults who wish to create an account for a minor can open a custodial account. They may be used for education or just as a general gift to be held for the future. The donor chooses a custodian to manage how and where the funds are spent or invested. The money can be invested in a variety of assets at a bank, credit union or brokerage house.  They can be easier and less costly than setting up a trust fund. 

Boost What You Know About Investment Accounts

There are a variety of investment accounts you can use to reach your savings goals. Your goals, risk tolerance and available funds will determine your investment strategy. Navy Federal Investment Services can help you with financial planning and investment services.