Skip to main content

Choosing investment accounts

Deciding on an account type is easier than it might sound. It just comes down to the reason you're investing.

POINTS TO KNOW

  • You need an account to hold your investments.
  • Some accounts are meant for specific goals.
  • General accounts can be used for anything.

Accounts for common goals

There are specific types of accounts for certain goals, some of which offer tax benefits. If you're saving for college or retirement, start by looking at these account types.

Retirement

If you're self-employed or own a business, there are specific types of retirement accounts just for you. For everyone else, a 401(k) or 403(b) plan (through your employer) or IRA (on your own) is the way to go.

You can also use annuities to create an income stream in retirement or to save additional money for retirement if you've maxed out your IRA and employer plan.

College

Start by considering a 529 savings plan or an UGMA/UTMA account. There are significant differences between the 2 account types. If you're sure the money will be used for college, a 529 plan is likely your best bet.

Accounts for everyone

If you're not saving for college or retirement, or if you prefer a little more flexibility, you can open a general investing account. With this type of account, you can buy and sell whenever you want, but you pay taxes on your investment earnings.

If you have an existing trust that's designed to control what will be passed down to your heirs and minimize estate taxes, you can open an account in the name of the trust. We recommend you talk to your attorney or tax advisor about whether this would be appropriate in your situation.

What's next?

Once you've got the basics down, it's time to choose your investments.


Get complete portfolio management

We can custom-develop and implement your financial plan, giving you greater confidence that you're doing all you can to reach your goals.

Saving for retirement or college?

See guidance that can help you make a plan, solidify your strategy, and choose your investments.

Already know what you want?

From mutual funds and ETFs to stocks and bonds, find all the investments you're looking for, all in one place.

REFERENCE CONTENT

Layer opened.

IRA

A type of account created by the IRS that offers tax benefits when you use it to save for retirement.

Layer opened.

Annuity

A type of investment account that can be used to save for retirement or to generate regular income payments in retirement. An annuity is an insurance contract, and the issuing insurance company provides some type of guarantee on your investment.

Layer opened.

529 savings plan

A type of investment account that offers federal and state tax benefits to people saving for higher education. These plans are sponsored by particular states but are usually open to anyone. The money in a 529 savings plan can be used for tuition and other qualified expenses at thousands of colleges, universities, graduate schools, and trade and technical schools in the United States and abroad.

Layer opened.

UGMA/UTMA account

A Uniform Gifts to Minors Act or Uniform Transfers to Minors Act account owned by a minor that's off limits until he or she reaches adulthood. After that, the money can be used for any purpose.

Layer opened.

Earnings

The investment returns you accumulate on the savings in your account.

Layer opened.

Trust

A legal arrangement through which property, such as investments or real estate, is held by a trustee on behalf of a beneficiary. Trusts are often used as part of a plan to minimize or eliminate estate taxes.