There are many, many types of investment accounts with varying purposes. Honestly, it can be hard to keep track of them all or even know what some of them are. I always thought of investment accounts as something very specific, but there’s a lot more to it than I realized. Since I prefer bite-sized information over long-winded explanations, I wanted to provide a short description of the most common types of investment accounts. So, here are the highlights:

• Brokerage Accounts are what comes to mind when I think about “investment accounts”. They’re accounts to buy and sell stocks, bonds, mutual funds, etc. These are what I like to call “money now or money later” investments. You can invest for the long haul and keep some money in “cash” for more short-term needs.
• Retirement Accounts are for retirement (as we know). The money that you put into your IRA/Roth IRA/401(k) gets invested, which didn’t really dawn on me until a few years ago. These are “money later” investments and there’s a fee for withdrawing money too young.
• Education Accounts are used only for funding education, whether that’s K-12 or college. In most cases they’re opened by parents/guardians for kids, but you can open one for yourself. These are “money in a bit; conditionally” investments. Typically, the accounts are opened and invested years before they’re needed and, again, they’re only used for school.
• Health Savings Accounts (HSAs) are something I didn’t know were a thing until recently, but I find them pretty useful. You can use your HSA card for medical needs, meanwhile the money in your account is invested and contributed to. In order to get an HSA, you need to be enrolled in a qualifying High-Deductible Health Plan (typically through an employer). These are “money now; conditionally” investments. As long as you have money in your account you can use it, but only for medical expenses.
• Custodial Accounts (UGMAs/UTMAs) are accounts that you open for a minor, or maybe someone opened one for you when you were a minor. The money is invested and can be contributed to by the custodian (person who opened and manages the account) until the minor turns 18. These are “money in a bit” investments – once the minor becomes an adult, they get to decide what to do with the funds.

There are a lot of things I didn’t get into, like tax implications, mostly because I don’t want to over-saturate my brain or yours. More often than not, too much information just gets tuned out. I do it all the time and, don’t lie, so do you. So, this has been an overview of investment accounts to help you and me keep them straight. If you want more, I suggest seeking out an investment advisor. I can even introduce you to a few.