11 Best Investment Account Types for Young Investors [2022]

When choosing from the best types of investment accounts for young investors to open, you should consider when and how you plan to use the money (education, retirement, etc.) and whether they are qualifying or non-qualifying investments. 

1. Brokerage Accounts

An individual brokerage account is one of the most basic and flexible types of investment accounts you can open. With brokerage accounts, you can buy and sell investment vehicles, such as stocks, bonds, mutual funds and options, through a licensed broker with very few restrictions. 

2. Money Market Fund (Cash Equivalents)

A money market fund (not to be confused with money market accounts) is a mutual fund that invests only in cash and cash equivalent securities. These are liquid, short-term investments with high credit quality, including: - Certificates of deposit (CDs) - U.S. Treasuries

In brief, these act as company-sponsored accounts provided by some employers. They work by having you designate a percentage of your income (from each paycheck) to contribute throughout the year. 

3. 401(k)

4. 403(b) & 457 Plans

A 403(b) plan is the equivalent of a 401(k) for people who work at non-profit, tax-exempt businesses. For government employees, 457 plans are their versions of 401(k)s. 

5a. Traditional Individual Retirement Account (IRA)

A traditional individual retirement account (IRA) allows you to contribute direct, pre-tax income towards investments that can grow tax-deferred. These accounts use pre-tax income similarly to how corporate 401(k)s work. When you withdraw (after age 59.5), you pay taxes on the money. 

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