Before opening an investment account, you should consider whether or not this type of financial service is best suited to your risk-reward ratio. Additionally, liquidity preferences embody your goal. Investment accounts are typically managed with long-term goals in mind. The long-term term is traditionally considered to be 7 years or more, but this number should not be the deciding factor when deciding whether or not to open an investment account. This banking service is often used when a certain event occurs in your life that requires higher income, such as: B. if you need to send your child to college, buy a house, or retire.
Since one of the most important determining factors of an investment account is its long-term nature, you should be prepared for another characteristic of the investment account - liquidity. Any financial instrument is less liquid compared to cash in your checking or savings account. In addition, this type of deposit typically incurs higher transaction costs if you wish to access the funds earlier than a specific time specified in the agreement between you and the financial institution.
