Believe it or not, this decision has a direct impact on on your bottom line.
More recently, I created a safe investing process for myself, and executed that strategy with a discount broker.
The strategy proved to be successful (I made money), so I decided to improve my process by looking for ways to reduce costs.
My strategy required monthly trades, so I knew that finding a broker with low commissions and fees would be a good place to start.
For fun (I know, I have no life) I used my trading log and updated it with different brokers' commission structure just to see how much money I could have saved.
Same trades, just a different cost for each trade.
Safe Investing Principle #7 in action...I paid a broker an extra $810 dollars that could have gone in my pocket.
Now that you have a real-world example under your belt, know that there are times when this decision will be made for you, such as your employer-sponsored retirement accounts or if you pay someone to manage your money.
Whether you decide or not, the type of trading account you use impacts your ability to apply certain investing techniques and strategies, the types of investments you can buy and sell, and as I experienced, even how much money you can make!
For example, a bank account can be considered one type of personal investment account. It acts like a warehouse for your money, and since investing is about having access to money sometime in the future, bank accounts qualify.
As your accounts grow, make sure the balances are still within the maximum covered by the FDIC and SIPC. This is especially important if you have more than one account with a single bank or broker.
For more information of these limits and other considerations on account sizing, check out my page on portfolio sizing.
And you can also keep things simple by having all your investing accounts in one place (if that is important to you).
It is an EMPLOYER'S responsibility to manage investments in order to pay out the monthly benefit upon retirement.
The deposited amount varies, based on the employer's compensation structure, an employees personal contribution, and whether or not that contribution is matched.
It is an EMPLOYEE'S responsibility to manage investments in order to create a monthly benefit upon retirement.
Individual Retirement Accounts (IRA)
Employer Sponsored Retirement Plans
There are a differences that you need to consider. Click here to learn more about these differences and how they affect your retirement investment account.
In terms of managing this type of account, the time-frame is similar to a retirement account (long-term).