Before opening an investment account, you should evaluate whether this kind of financial service is the most suitable for your risk/return or not. Moreover, liquidity preferences embody your goal. Investment accounts are usually operated with long term objectives. Traditionally, long term is considered to be 7 years or more, but this number should not be the main determinant while choosing whether or not to open an investment account. This bank service is frequently used when a certain event is going to take place in your life, which will require bigger amount of income, such as sending your child to college, buying a house or facing a retirement.

As one of the main determinants of investment account is its long term nature, you should be ready to face another attribute of it – liquidity. Any financial instrument has less liquidity in comparison to cash in your checking or savings account. In addition, this type of deposit is typically charged with higher transaction costs, in case you want to access the cash earlier than at certain point of time defined by the agreement between you and the financial facility.

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