• Treavor Dodsworth

#53 - Investment Layers


When you purchase an investment, there are generally three layers. Today, I am offering a quick explanation of those layers to provide some clarity around investing.


The first layer is the custodian. This is the actual financial institution where the money is “held.” An example of this would be TD Ameritrade or Fidelity.


The next layer is the account type. An example of this is a Traditional IRA or 403b plan. One of the main differences between account types is how the money is treated for tax purposes. An individual could own multiple different accounts at a custodian.


The third layer is the investment product itself. This is the mutual fund, ETF, etc. that you purchase within the account. The investment product is what primarily drives investment return. You can own many different investments within one account.


To pull all this together, let’s say you get a statement from Vanguard for your 401k that is talking about an investment in your account - VTSAX. Vanguard is the custodian, 401k is the account type, and VTSAX is the investment product.


Sometimes there are overlaps between the layers and it can be confusing. Identifying the layers - who is the custodian, what is the account type, and what is the investment product- can help provide some clarity and organization when looking at your investment portfolio.

Interesting Article(s) or Video(s)

CNBC - Joe Burrow doesn't plan on spending any of his contract money

  • Joe Burrow has a four year $36.2 million deal with the Cincinnati Bengals. Per the article, he doesn’t intend to spend any of it. Just for fun, let’s assume he received all of it in year one and 50% went to taxes. If he invested the remainder for 40 years at a flat 7% return, he would have about $271 million- not a bad retirement sum.

Thank you for reading!

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