An investment account is maintained with financial institutions such as banks, brokerage houses, or even insurance companies. The primary purpose of this account is preservation and capital growth, as well as earning fixed income gains through long-term deposits in the asset portfolio.
In general, "investing" means a proactive use of assets in a very broad sense - 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. Meanwhile, the basic goal of investing 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 investment value is cheaper. Depending on the asset you want to invest in, you need to look at your investment as a long-term process as you have to wait for the value of the particular object to increase.
Investment Account Features
Before opening an investment account, you should consider whether or not this type of financial service is best for your risk/reward balance. Furthermore, liquidity preferences embody your goal. Investment accounts are usually maintained with long-term goals. Long-term maturity is traditionally considered to be 7 years or more, but this number should not be the determining factor in 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, e.g. For example, if you need to send your child to college, buy a house, or retire.
Since one of the most important determinants of an investment account is its longevity, you should be prepared for another attribute of the investment account - liquidity. Any financial instrument is less liquid compared to cash in your checking or savings account. Additionally, this type of deposit usually incurs higher transaction costs if you want to access the funds earlier than a certain time specified in the agreement between you and the financial institution.
