Investment accounts are those that hold stocks, bonds, funds and other securities, as well as cash. A key difference between an investment account and a bank account is that the value of assets in an investment account fluctuates and can, in fact, decline. In exchange for this risk of loss, investments tend to offer the potential for greater reward, especially over the long term.
For this reason, assets in an investment account are often used to meet financial goals that are well in the future, such as saving for retirement or college. In fact, it’s not uncommon to have a number of investment accounts, each used to help meet a specific financial objective.
This section introduces you to the major types of investment accounts. You’ll learn how they work, who regulates them, who’s eligible to participate, and how to buy and sell the various investment products that each account might hold. Along the way, we’ll provide tips on sound account management and how to steer clear of pitfalls that could keep you from reaching your financial goals.