What is an investment account and how can it make you money?

A quick and simple guide to investment accounts for beginners.

You've heard that investment accounts can help to grow your wealth, but how do you choose the right one? There are many different ways to invest your money; financial institutions tailor different accounts to suit different people. Read about the different types of investment accounts, the benefits and the risks.

What is an investment account?

An investment account is a broad term applied to any kind of account that gives you a financial return. Investment accounts include: share trading accounts, self managed super fund accounts, term deposits, deeming accounts and retirement accounts.

It's important to note that various types of investment accounts present different risks and returns. Not all of them will be suitable for you, depending on your investment strategy.

Share Trading Account Offer

IG Share Trading Offer

$0

monthly fee

$8

standard trade

Share Trading Account Offer

Special offer: Earn up to 10,000 Qantas Points on a new IG Share Trading account.
Competitive broker fees on Australian and international shares

  • Monthly fee: $0.00
  • Brokerage fee - standard trade: $8.00
  • International: Yes
  • Support - After hours: Yes
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Compare investment accounts

Updated October 16th, 2019
Name Product Monthly fee Standard Brokerage Fee Margin trading - Online
$0
$8.00 or 0.1%
Yes
Special offer: Earn up to 10,000 Qantas Points when you start trading on a new IG Share Trading account. T&C applies.
Enjoy some of the lowest brokerage fees on the market when trading Australian shares, international shares, forex and CFDs, plus get access to 24-hour customer support.
$0
$6.99 or 0.1%
Yes
High quality, low-cost brokerage on global share trading.
Access up to 19,000 global stocks on 36 of the world’s major stock exchanges and enjoy some of the most competitive FX rates on the the market when you trade with Saxo Capital Markets.
$0
$9.50
No
Trade ASX-listed shares for a flat fee of $9.50, regardless of the trade size.
New customers receive free access to Community Insights with SelfWealth Premium for the first 90 days. Follow other investors and benchmark your portfolio performance.
$0
$15 for first 10 trades
Yes
Offer: For a limited time, get a custom deal based on your trading preferences when you switch to Bell Direct.
Bell Direct offers a one-second placement guarantee on market-to-limit ASX orders or your trade is free, plus enjoy extensive free research reports from top financial experts.
$0
$11 or 0.1% for first 10 trades (for trade value up to $11,000)
Yes
Access a broad range of investment products from Australia and overseas.
Take advantage of IPOs and trade shares, warrants, options and CFDs listed across the ASX, SSX and Chi-X, and other major global exchanges, including US, Canada and UK markets.

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Rates last updated October 16th, 2019
$
Name Product 3 Mths p.a. 4 Mths p.a. 5 Mths p.a. 6 Mths p.a. 7 Mths p.a. 12 Mths p.a. 24 Mths p.a. Product Description Interest Earned
UBank Term Deposit Account
1.70%
1.70%
1.70%
1.70%
1.70%
1.60%
-
Customers who reinvest their term deposit upon maturity receive a 0.10% loyalty bonus.
The 5 and 7 month terms are UBank's Green Term Deposits, where your money will be matched to a portfolio of renewable energy projects.
MyState Bank Online Term Deposit
1.70%
1.65%
1.40%
1.50%
1.40%
1.35%
1.30%
Single or joint account-holders can apply online with MyState's online application process.
The MyState Bank Online Term Deposit has a choice of term lengths. Interest is paid upon maturity of the term deposit.
Judo Bank Term Deposits
-
-
-
2.35%
-
2.15%
2.20%
Earn a 0.10% p.a. loyalty bonus when you roll over your term.
The Judo Bank Term Deposit term lengths range from six months to five years. Minimum opening deposit is $1,000. No account-keeping or set-up fees to pay.

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Rates last updated October 16th, 2019
$
$
months
Name Product Maximum Variable Rate p.a. Standard Variable Rate p.a. Bonus Interest p.a. Fees Min Bal / Min Deposit Interest Earned Product Description
Citi Global Currency Account
1.50%
1.50%
0.00%
$0
$250,000 / $0
Hold up to 10 currencies.
$0 monthly account fee.
Enjoy one linked debit card to hold up to 10 currencies and receive foreign currencies for free. Earn up to 1.50% p.a. interest on your AUD balance.
ANZ Premium Cash Management Account
0.10%
0.10%
0.00%
$0
$1,000 / $10,000
Ongoing, variable 0.10% p.a. when you link to access card from ANZ. Available on balances $10,000 and more.

Macquarie Cash Management Account
0.55%
0.55%
0.00%
$0
$5,000 / $0
Receive dividend payments, track your investments spending and pay no account keeping fees. Earn 0.55% p.a. on balances $5,000 and over.
Bank of Queensland Cash Management Account
0.25%
0.25%
0.00%
$5
$0 / $5,000
Earn an ongoing variable 0.25% p.a. and pay no monthly account keeping fee when you maintain a balance above $5,000.
IMB Cash Management
0.05%
0.05%
0.00%
$0
$0 / $5,000
Ongoing, variable 0.05% p.a. Available on balance $5000.00 to $9999.99.
Community First CU Money Market Account
0.10%
0.10%
0.00%
$0
$0 / $5,000
Ongoing, variable 0.10% p.a. for deposits under $10,000. Interest rates are tiered, with higher interest rates available on larger deposits.

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Rates last updated October 16th, 2019
$
$
months
Name Product Maximum Variable Rate p.a. Standard Variable Rate p.a. Bonus Interest p.a. Fees Min Bal / Min Deposit Interest Earned Product Description
Border Bank Online Supersaver
0.35%
0.35%
0.00%
$0
$0 / $0
Ongoing, variable 0.35% p.a. Available on balances $500-$5000
BCU Retirement Savings Account
0.56%
0.56%
0.00%
$0
$0 / $0
Ongoing, variable 0.56% p.a. Available on balances up to $1,999.99.

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What are the different types of investment accounts?

Investment account is an umbrella term which includes a number of different financial products. Common types of investment accounts are:

  • Share trading investment accounts. Trade securities using a share trading account. This type of account has features that will appeal to traders, such as free brokerage. A share trading investment account can be tailored to suit your needs, for example, an investment account can easily be made into an investment loan if you need more capital.
  • SMSFs. This can be a series of accounts for your SMSF, one account for SMSF savings, an account for day to day expenses and an account for trading and investing, SMSF investment accounts are offered by most major financial institutions.
  • Margin loans. A margin loan gives you a line of credit to use to invest. Margin loans can be secured to a property or other asset such as a share portfolio. Margin loans can be used for certain investments but not others. You can use a margin loan to invest in common types of investment accounts like what’s discussed on this page
  • Term deposits. One of the safest ways to invest your money, a term deposit gives a higher return when you lock your money away for longer periods. There’s a penalty if you want to access your money before the term deposit matures and there are bonuses if you continue to invest your money once the first investment matures. Term deposit accounts are common and you can easily compare rates and fees using websites such as finder.com.au
  • Cash management accounts. A cash management account is also called a high interest savings account. Like a term deposit, this investment account gives you a guaranteed return on your deposit. Unlike a term deposit, you can earn bonus interest for an introductory period or when you meet certain conditions, such as maintaining a minimum monthly deposit, and you can access your money when you want without penalty.
  • Deeming account / retirement account. This type of investment account is aimed at Australians who are retired or claiming government benefits. Funds in a retirement account accrue interest at a rate tethered to the government’s deeming rate — the investment rate of return used to calculate Centrelink benefits. Deeming accounts are offered by most registered deposit taking institutions.
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How do I compare investment accounts?

Consider these points when you compare investment accounts.

  • Risk profile. Riskier investments give greater returns. Savings accounts and term deposits are among the safest types of investments, whereas share trading has the potential for big gains and losses. Everyone has a different risk appetite. There is a relationship between your risk appetite and your investment goals.
  • Your investment goals. Why are you investing? Is it to grow your retirement nest egg, are you saving for a deposit for a home or are you looking for a quick dollar. Access to capital and risk appetite are two important factors in deciding your investment goals and subsequently which investment account is right for you. For example, a high interest saving account is a better investment account for someone saving for their first home than a share trading account. Share trading can lead to big gains, but the chance of losing everything probably won’t appeal to someone saving for their first home. Your investment goals dictate your investment strategy, which is a must have for anyone comparing investment accounts.
  • Your investment strategy. Considering your investment goals, which investment account or investment account mix is suited to your needs. You can hedge your bets by choosing the right mix of investments. Your investment strategy also needs a time frame.
  • The length of the investment. Are you investment goals short, medium or long term? Different investments have different investment cycles. You can invest in a term deposit for a set period of time, for example, shares can be a little less black and white. Your goals and timeframe to realise those goals should help you make a decision about the best investment account for you.
  • Liquidity. Also compare different investment accounts based on how easily you can access your money. Savings accounts are among the most liquid type of investment account, you can get your money when you want it. Securities only become a liquid asset if you can find a buyer.

What are the pros and cons of using an investment account?

Pros

  • Financial gain. Different investments and investment accounts have the potential for different gains. The potential for capital gains is tied to the risk of the investment.
  • Choice. These types of accounts give you control over how you spend your money. Share trading accounts, retirement accounts, savings accounts and SMSF-funds are all different types of investment account.

Cons

  • Risk. The risk of suffering a capital loss.
  • Not for everyone. You need to have done your homework before you start investing and open an investment account.
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What are the risks?

  • How risky are you? The investment risk varies depending on the investment type. Term deposit and high interest savings accounts are basically no risk investment accounts, but the returns are low compared to the potential for capital gains from trading shares.
  • Margin lending. A margin loan investment account can be a great way to get capital to invest; however, this is a risky way to access cash. If you suffer a loss, the lender can claim the asset you use as a security for the margin loan.

Frequently asked questions

How do I open an investment account?

You can apply for an investment account if you’re over 18 and if you’re applying in your own name or in the name of a trust. Each type of investment account has it’s own application requirements. Before you can open an investment account, you may need to have an account with the financial institutions, like a transaction account and a credit card or a home loan for example. Some investment accounts have a minimum opening balance, you need to provide your address, your tax file number (you can supply this information after you apply) and information about any accounts you hold with the financial institution.

Can I open a joint investment account?

You can jointly open some investment accounts but it depends on the provider and type of account.

Can I have more than one investment account?

By holding a diverse spread of investments you’re reducing your risk. You can have multiple savings accounts, share trading accounts, term deposits from the same or different financial institution at a time.

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