Private investment accounts involve accounts where the investment decisions or the investment type is selected by the private individual that created the account. These types of accounts are not the same as bank deposits or any type of deposit accounts that are insured by a government entity like the Federal Deposit Insurance Corporation (FDIC). In addition, Social Security savings are not considered a private investment account since you cannot invest your contributions.
Private Bond Investment Accounts
Bonds can be considered a private investment account whether you do it through a bond fund or purchase individual bonds through a broker. In addition to government-sponsored bonds, you can also have corporate-sponsored bonds in your private bond investment account.
Private Retirement Investment Accounts
Retirement accounts also meet the private investment account criteria. A 401k account allows you to select from a menu of funds in which you can invest. The self-directed Simplified Employee Pension (SEP) plan, Keogh plan and Individual Retirement Account (IRA) accounts provide you with an abundance of private investment choices such as bonds, stocks, exchange-traded funds (ETFs and even real estate investment trusts (REITS).
Private Equity and ETF Investment Accounts
You can always create a nonretirement private investment account composed of stocks and ETFs. Among the stocks you can choose to select from include high-growth aggressive stocks or the more conservative income-oriented stocks. ETFs offer you diversification by using a particular type of fund to invest in a group of stocks, bonds, currencies or commodities based on your investment objectives.
Private Mutual Fund Investment Accounts
An investor can also create a private investment account using mutual funds. Mutual funds allow you to select what mutual funds you would like to participate in based on the fund’s investment objectives. One of the key benefits of using mutual funds is the fact you get the services of professional fund managers.
Private Futures and Hedge Fund Investment Accounts
You can start a private investment account using futures and hedge funds. You can set up a futures account to invest in various commodities and currencies, or you can select a hedge fund and let the fund manger select the investments. Hedge funds also use the futures market to invest along with options and other aggressive strategies. Keep in mind that both these private investment accounts use a lot of leverage and can be very volatile at times.
- Investment Management for Taxable Private Investors; Jarrod Wilcox; 2006