If you are looking for investment options but are not sure where to start, an Investment Management Account (IMA) may be a great option for you. This blog post will explore the different types of investments that can be held within an IMA and provide helpful tips on how to choose the best investment products for your needs.
What is an Investment Management Account?
An Investment Management Account, or IMA, is an umbrella term for investment accounts that are managed by a portfolio manager or professional financial advisor. This type of account typically offers a diverse range of investment options, including stocks, bonds, and mutual funds. When you open an IMA, you will work with a financial advisor to create an investment strategy that aligns with your goals and risk tolerance. The advisor or portfolio manager will then manage your account, making changes and adjustments as needed to maintain alignment with your goals and risk tolerance. An IMA is a great option for individuals who want to take an active role in their investments but may not have the knowledge or expertise to do so on their own. With a professional guiding the way, you can feel confident that your investments are in good hands.
Advantages of Holding Investments in an IMA
An IMA is an investment vehicle that offers diversification and flexibility to investors. It is a customized account that allows investors to own a portfolio of securities, including stocks, bonds, and mutual funds. One of the most significant advantages of holding investments in an IMA account is that it provides professional investment management. Investors benefit from the expertise of a professional portfolio manager who will analyze and rebalance their portfolio based on market changes and their investment objectives. Additionally, an IMA account offers tax efficiency and consolidation benefits, making it easier for investors to manage their investments in one account. Overall, an IMA account is an ideal investment option for investors who seek investment diversification and professional management.
Types of Investments That Can be Held in an IMA Account
Investors can choose from a variety of investment types to hold in their IMAs. Some common investment types that can be held in an IMA account include:
Stocks are a popular investment option that can be held in an IMA. When you purchase stocks, you buy a small piece of ownership in a company. This ownership entitles you to a share of the company’s profits. Investing in stocks can be a great way to grow your wealth over time. Furthermore, investing in stocks can help diversify your investment portfolio. By owning shares in different companies across various industries, you can spread out your investment risk. For example, if you only invest in one company and that company fails, you could lose all of your investment. However, if you invest in multiple companies across different sectors, you may be able to reduce your risk and potentially see higher returns. Stocks are a valuable investment type that can provide higher returns and diversify your investment portfolio. By choosing to hold stocks in an IMA account, you can benefit from professional management and potential tax advantages. Consider speaking with a financial advisor to determine if stocks are a suitable investment option for your goals and risk tolerance.
Bonds are another type of investment that can be held in an IMA. Unlike stocks, bonds do not represent ownership in a company. Rather, they are a form of debt that an investor extends to an issuer, such as a corporation or government entity. In return, the issuer pays the investor interest over time and returns the principal investment at the end of the bond term. Investing in bonds can be a valuable addition to an investment portfolio as they can provide regular income, capital preservation, and portfolio diversification. Bonds also offer capital preservation, which can be attractive to investors who prioritize preserving their principal investment. Unlike stocks, which are subject to market fluctuations, bonds have a set interest rate and maturity date, which can provide investors with a more predictable return. Additionally, bonds can provide diversification benefits to a portfolio. By investing in bonds, an investor can spread their risk across different issuers and sectors, reducing the potential impact of any one bond defaulting. By choosing to hold bonds in an IMA account, investors can benefit from professional management and potential tax advantages, making it an attractive option for those seeking to expand their investment portfolio.
3. Mutual Funds
Mutual funds are a type of investment in which money from multiple investors is pooled together to purchase a diversified portfolio of stocks, bonds, and other securities. This can provide benefits to investors in a number of ways, such as increased diversification, professional management, and potential tax advantages. One of the main advantages of holding mutual funds in an IMA is that it allows investors to access a diversified portfolio of securities without having to purchase them individually. Mutual funds can hold hundreds or even thousands of individual securities, providing a level of diversification that many investors would not be able to achieve on their own. This diversification can help reduce investment risk, as losses in one security may be offset by gains in another, spreading out the overall risk of the portfolio. Another advantage of mutual funds is that they are professionally managed by experienced portfolio managers who are responsible for making decisions about which securities to buy and sell, as well as rebalancing the portfolio as necessary to ensure that it stays in line with the fund’s investment strategy. This can be especially valuable for investors who may not have the time, knowledge, or expertise to manage their own portfolio effectively. In addition to providing diversification and professional management, mutual funds held in an IMA may also offer tax advantages. For example, some mutual funds are designed with tax-efficiency in mind, which can help investors minimize the tax impact of their investments. Additionally, holding mutual funds in an IMA can make it easier to manage taxes, as all of the investor’s investment activity is consolidated in one account. When combined with the other investment types available in an IMA, such as stocks and bonds, investors can create a well-rounded and diversified portfolio that aligns with their goals and risk tolerance.
4. Exchange-traded Funds (ETFs)
Exchange-traded Funds (ETFs) are similar to mutual funds in that they are made up of a diversified portfolio of stocks, bonds, and other securities. However, unlike mutual funds, ETFs are traded on an exchange, which allows investors to buy and sell shares throughout the trading day, just like individual stocks. In addition to flexibility and liquidity, ETFs also offer potentially lower costs compared to mutual funds. This is because many ETFs have lower expense ratios compared to mutual funds. Expense ratios are the annual fees charged by funds to cover their operating costs, usually expressed as a percentage of assets under management. ETFs typically have lower expense ratios because they require less ongoing management and administration compared to mutual funds. ETFs also offer tax efficiency, which can be a significant benefit to investors. This is because ETFs are typically structured in a way that minimizes capital gains taxes. Mutual funds, on the other hand, may generate capital gains that are distributed to shareholders, which can create tax liabilities for investors. By minimizing capital gains taxes, ETFs can help investors to keep more of their returns over time.
Each investment type has its own unique risks and rewards, so it is important to determine your personal investing goals and risk tolerance before deciding which investments to hold in your IMA account. With the help of a financial advisor, you can create an IMA account that aligns with your specific financial objectives, offering a tailored investment strategy to help you achieve your goals.
Long-term Investing Considerations for IMA Accounts
Long-term investing for IMAs requires careful consideration of various factors. For instance, assessing the investment objectives, time horizon, and risk tolerance level of the account holder are crucial steps towards identifying the most suitable investment options. This is because IMAs require a long-term outlook that factors in market fluctuations, inflation, and other economic indicators. Additionally, identifying reliable investment managers who are capable of consistently delivering positive returns on investments is equally important for long-term success. By taking an informed approach to long-term investing considerations, individuals can position themselves to achieve their personal financial goals and build a lasting legacy for future generations.
Tips for Making Smart Investment Decisions Within Your IMA Account
When it comes to managing your IMA, making wise investment decisions is key to growing your wealth. One important tip is to diversify your portfolio by investing in a variety of asset classes, such as stocks, bonds, and real estate. Another crucial consideration is to set realistic investment goals and stick to them, avoiding impulsive decisions based on short-term market fluctuations. Additionally, take the time to research potential investments thoroughly and seek the guidance of a trusted financial advisor to help guide your decision-making process. By following these tips for making smart investment decisions, you can build a strong, diversified portfolio that aligns with your long-term financial goals.
In conclusion, investing within an IMA account can be a great way to simplify your portfolio and manage investments with ease. By taking advantage of the various benefits that come with an IMA account, such as tax savings, flexibility of holding different asset types, and consolidation of accounts, you can create financial resilience while keeping fees low. Consider speaking to an expert before opening an IMA to ensure it is the right fit for your needs and overall financial objectives. When it comes to investing in a challenging market environment like this one, an IMA can be both powerful and rewarding. With the right strategy and advice in place, you will have a greater chance of achieving your financial goals through intelligent IMA account management. consult with a qualified financial advisor to determine the best course of action for your individual financial goals.
Investment Management Accounts with Members Trust Company
As a leading wealth management provider, Members Trust Company offers investment management services that give credit union members access to top-performing exchange-traded funds. Compared to traditional mutual funds, ETFs offer investors a broader range of investment options, greater liquidity, and lower expenses. Our IMAs are managed by highly experienced financial professionals who have a deep understanding of market trends and investment strategies. As CFA® charterholders, our Investment Team represents the very best in the industry, bound by the highest ethical standards. Their expertise enables them to identify and invest in ETFs that are most suitable for our member clients. Furthermore, our IMAs are designed to cater to both new and seasoned investors. Regardless of your stage in the financial planning process, our team can recommend the right solution for you based on your specific goals and risk tolerance. Give us a call today and take the first step in investing for your future: (888) 727-9191.
Non-deposit investment products available through Members Trust Company are not deposits of or guaranteed by the trust company, a credit union or credit union affiliate, are not insured or guaranteed by the NCUA, FDIC or any other governmental agency and are subject to investment risks including possible loss of the principal amount invested. Members Trust Company, owned and managed by America’s credit unions, is a special purpose federal thrift regulated by the Office of the Comptroller of the Currency. Past performance is not indicative of future results. This is for informational purposes only and is not intended to provide legal or tax advice regarding your situation. For legal or tax advice, please consult your attorney and/or accountant. Any opinions expressed are those of the presenter and do not necessarily reflect the position of Members Trust Company. The information above is obtained or compiled from sources we believe to be reliable. We Do Not Guarantee that such information, will be free from errors, omissions, whether human or mechanical, nor do we guarantee their timeliness, accuracy, or completeness.