Bank Account vs. Investment Account: Which is Better?


Opening a bank account and opening an investment account might not come convenient when done simultaneously. Not everyone can afford to have savings and investments at the same time as well. Both of these accounts can help you start building your financial freedom soon, so you might as well do the right move first.

Now, let me share with you what you need to consider in case you are stuck between choosing to open a bank account or an investment account. If you can’t afford to open both yet, here are the benefits of each. I hope this can help you decide.

Benefits of opening a bank account

A bank account is good as a savings account. If you open one, you can manage your money better. You can keep your money safe while you are saving more amount. Compared to leaving your money at home or in a vault, a bank account is safer from theft. Also, you won’t get tempted to spend your money knowing that you still have to go through the process of withdrawal. Lazy depositors would rather spend their time at home rather than travel to the bank.

Compare to opening an investment account, a bank account is more liquid. You just need to withdraw your money to get hold of it whenever you need it. There no need to go through the inconvenience of redeeming your rewards (in the case of an investment). There’s no approval or whatsoever. Your money is not locked up.

If you are saving up for your emergency funds, then opening a bank account is more suitable since your money is stable there and there’s no price volatility threat.

Benefits of opening an investing account

Now, let’s move on to opening an investment account. There are many benefits when you invest. First, if you have an investment account, you have the opportunity to grow your money passively. If you want financial freedom in the future, this suits you well. The main reason why people are choosing an investment account over a bank account is that there is a higher rate of return. Banks pay less than 1% of interest in a year while investment returns can go up to 100% if done correctly.

There are actually investors who can double and triple their investments after some years. Imagine how big the return is. Investments are good sources of passive income.

Which is better?

If you are wondering which is better between a bank account and an investment account, well, that depends on your goal. If your goal is to save up for your emergency funds, then opening a bank account is more favourable to protect your money from price volatility. If you are looking for something that will give you a higher return, then having an investment account is more rewarding.

If you can open both at the same time, do it. You don’t have to invest all your money. You can also consider saving half in a bank account and half in an investment account.





Image and article originally from marvingermo.com. Read the original article here.