Investment Accounts: Advantages and Disadvantages
 

Investment Accounts: Advantages and Disadvantages

Personal investment accounts like the FNB Restart Fixed Deposit Investment Account can be described as a type of financial account which contains funds that are held by your bank/financial institution. These funds are held for the purpose of a long term investment for capital preservation, growth or fixed income.

Types of Investment Accounts

There are many types of investment accounts, including fixed deposit accounts; long-term savings accounts; prime-link deposit accounts and more. While the conditions and limitations vary depending on the type of investment account you choose, here are a list of the main advantages and disadvantages of personal investment accounts:

Advantages:

  • A personal investment account allows you to make decisions regarding how to allocate your funds in the account, based on your assessment of risk and investment criteria. The destiny of your portfolio is in your hands.
  • Investment accounts give one the potential for great investment returns.
  • There is the possibility of long-term investment.
  • You can save your money tax-free.
  • The amount of money which you want to invest is up to you. The amount can be small or large.
  • Investment managers can monitor the markets in order to avoid dramatic losses.
  • You can specify the type of company in which you want to invest.
  • You can make big purchases, such as a second home, and earn income for free.

Disadvantages:

  • A personal investment account offers no guarantee of returns.
  • There is the potential loss of capital.
  • Depending on the type of investment account you open, long-term investment will prevent you from making early withdrawals.
  • There are often hidden costs and work involved. For example, when purchasing a property.
  • In order to make a profit, one has to usually rely on aptitude of investment manager.
  • The value of your investment can easily be affected by an economic crisis or market problems.

Summary

Overall, opening a personal investment account has its pros and cons, but if managed properly with the right knowledge, it can be very beneficial and help you save money for the future.

There are many great South African investment companies who can guide you in the right direction. Use LikeMoney to compare these companies so that you are able to make the right decision.

Summary
Investment Accounts: Advantages and Disadvantages
Article Name
Investment Accounts: Advantages and Disadvantages
Description
Personal investment accounts can be described as a type of financial account which contains funds that are held by your bank/financial institution. These funds are held for the purpose of a long term investment for capital preservation, growth or fixed income.
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Likemoney.co.za


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