Types of Accounts
What type of account is right for you?
Saving and investing for your goals will be easier and more convenient if you have the right types of accounts. These can range from basic savings, checking and brokerage accounts to specific accounts for retirement and for your kids. Not everyone needs every type of account, but it’s a good idea to learn about what’s available and how they can help you reach your goals.
You also have the opportunity to earn interest in a savings account. This interest is expressed as annual percentage yield (APY).
Important things to consider:
- The interest rates, benefits and terms of savings accounts vary from institution to institution as well as from account to account, so be sure to compare rates and fees before opening an account.
- Accessing money from a savings account is not always convenient. You may need to visit the bank or an ATM to access money.
- Some accounts require a minimum balance and have limits on withdrawals, payments and transfers.
- If you plan to withdraw money or need easier access to your money, a checking account may make more sense.
Important things to consider:
- As with savings accounts, the terms and conditions of checking accounts can vary from bank to bank. Sometimes a single bank will offer more than one type of checking account. As you compare banks and types of accounts, pay special attention to minimum balance requirements, fees, and limits on checks and ATM withdrawals.
- Some checking accounts offer interest on the money deposited.
- Many checking accounts offer overdraft protection.
- Most financial institutions now have online banking capabilities. By logging into the banking website, you can check account activity, view your account statements online and make certain types of electronic transactions, such as transferring money between accounts and paying bills. Compare online services before opening your account.
Important things to consider:
- Withdrawals from money market accounts are usually limited to six per month, three of which can be made by check.
- Often a high minimum balance must be maintained to avoid fees.
- A money market account is not the same as a money market fund. A money market fund is a type of mutual fund.
Important things to consider:
- When choosing a brokerage firm, keep in mind that you’re not choosing a person, you’re choosing a professional firm. Don’t base your decision on a specific broker. Rather, look at the reputation, location and breadth of services a firm offers.
- If you’re interested in investing online, check out a potential broker’s website for the breadth of services, technology and security offered.
Types of retirement accounts
There are several types of retirement accounts, each suited to a different personal scenario and need. Choose any of these categories to learn more:- Individual Retirement Accounts (IRAs).
- Employer-sponsored retirement accounts: 401(k)s and 403(b)s.
- Small business retirement accounts.