top of page
  • Writer's picture Treavor Dodsworth CFP®, CPA, CKA®

#53 - Investment Layers

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)

  • 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!


Thanks! Message sent.

All written content on this website is for information purposes only. Opinions expressed herein are solely those of Sycomore Financial, unless otherwise specifically cited.  Material presented is believed to be from reliable sources and no representations are made by our firm as to another parties’ informational accuracy or completeness. The owner of this website takes great care to thoroughly research the information provided to ensure that it is accurate and current. Nonetheless, the content on this website is not intended to provide tax, legal, accounting, financial, or professional advice, and readers are advised to seek out qualified professionals that provide advice on these issues. All information or ideas provided should be discussed in detail with an advisor, accountant, legal counsel, and/or other pertinent professionals prior to implementation. In addition, the owner cannot guarantee that the information on this website has not been outdated or otherwise rendered incorrect by subsequent new research, legislation, or other changes in law or binding guidance. Neither Sycomore Financial or it's owner shall have any liability or responsibility to any individual or entity with respect to losses or damages caused or alleged to be caused, directly or indirectly, by the information contained on this website. In addition, any advice, articles, or commentary included on this website do not constitute a tax opinion and are not intended or written to be used, nor can they be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer. Any mention of an investment product or solution is not a recommendation to buy or sell. ETFs that are mentioned may not accurately reflect the market segment mentioned. Past performance is not a guarantee of future results. Any mention of rates or return should not be seen as a guarantee those rates or return will be received.

bottom of page