When it comes to building wealth, investors use smart investing strategies that often include smart account selection to determine the best options that will enable them to build wealth. The right types of investment accounts can help to grow money, in addition to other benefits like shielding from taxes, employer benefits, and planning for significant expenses. Individuals looking to enter the investing space but unsure of the accounts that will enable them to reach their financial goals can consider these five accounts that every US investor needs to have:

Individual Retirement Account (IRA)

An IRA account is designed to help individuals save for retirement independently of their employer. It allows investments to grow either tax-deferred, which is also called a Traditional IRA, or tax-free, also called a Roth IRA. US investors without an IRA can compare the two kinds to determine which works best for their long-term financial goals and by understanding how they work. Investors can contribute up to $7,000 annually, or $8,000 for those 50 or older in 2025, into an IRA. In a Traditional IRA, investors can also make pre-tax contributions to get a deduction upfront and pay taxes later in retirement. A Roth IRA, on the other hand, uses after-tax dollars, but qualified withdrawals are entirely tax-free. Some of the advantages that come with having an IRA include:

• Depending on the kind of IRA and tax advantages, either now or in the future.
• Access to various investment options like stocks, bonds, ETFs, mutual funds, etc.
• Flexibility to open through any brokerage.
• IRAs can be used in conjunction with an employer plan.

Investors who would like to open an IRA account can create one through online brokerages like Public, Vanguard, Fidelity, or Charles Schwab. The process is straightforward and can be completed quickly by providing information on personal identification and bank information to fund the account.

Employer-Sponsored Retirement Account

An employer-sponsored plan, or ESP, refers to a benefit that employers provide at a reduced or no cost. These kinds of accounts include options like health insurance and retirement savings plans like 401(k), a retirement savings plan, and a Health Savings Account. A 401(k) or similar employer-sponsored retirement plan is designed to automatically direct part of an employee’s salary into a long-term savings account while shielding the money from taxes until they choose to withdraw it. On the other hand, a Health Savings Account allows employees to set aside money from their paychecks to pay for healthcare treatment and procedures that are not usually covered by insurance. The different advantages of these accounts include:

• There are high annual contribution limits.
• Employer matching can boost savings.
• Contributions reduce taxable income.
• Automatic payroll deductions enforce discipline.

Investors looking to open an employer-sponsored retirement account can first make sure that their employer offers such accounts. If it does, investors can enroll through the HR department on an internal benefits portal, where they can choose contribution rates and investment options based on their goals.

Brokerage Account

A brokerage account is an investment account that is held at a licensed brokerage firm, enabling investors to deposit funds into their account to execute orders for investments like stocks, bonds, mutual funds, and exchange-traded funds (ETFs) on behalf of the investor. This kind of account is the go-to tool for general investing outside of retirement or tax-advantaged goals, and it offers the most flexibility for buying and selling assets. Investors can deposit money into the account anytime and invest in nearly anything without complying with contribution limits or withdrawal restrictions. However, investors must pay dividends, interest, and capital gains taxes. The different advantages of this account are:

• There are unlimited contributions and withdrawals.
• Investors get access to a wide variety of investment assets.
• There are no penalties for early withdrawals.
• It can be used for short- or long-term goals.

Investors interested in a brokerage account can open one online through platforms like Public, Fidelity, Charles Schwab, Robinhood, or Webull, ensuring the platform aligns with investment goals. Most of these platforms have no account minimums and offer commission-free trades, and investors will have to link a bank account and complete a quick verification process.

Health Savings Account (HSA)

A Health Savings Account refers to a tax-advantaged account created for or by individuals to save for qualified medical expenses. One of the primary purposes of these accounts is that the contributions are invested over time and can be used to pay for a range of qualified medical expenses available to those with a High Deductible Health Plan (HDHP). Investors can contribute pre-tax dollars to the account to enable investments to grow tax-free, and withdrawals for qualified medical expenses are also tax-free. In 2025, individuals can contribute up to $4,300 and families up to $8,650, and after the age of 65, the funds can be used for any purpose. The different advantages of this account are:

• Contributions can reduce taxable income.
• There is tax-free growth and withdrawals for medical expenses.
• The account is portable and not tied to an employer.
• Funds can be invested in stocks and funds.

Investors who want a HAS can do so through their employers or by opening an account independently at banks and brokerages. To qualify, they must prove that they are enrolled in an HDHP.

529 College Savings Plan

529 plans are tax-deferred savings plans that are designed to help pay for college expenses. These plans help families save for future education costs with tax benefits and are ideal for parents, grandparents, or even individuals planning to return to school themselves. Investors can contribute after-tax dollars to the plan, and the money in the account grows tax-free. The withdrawals for qualified education expenses, like tuition, books, supplies, and certain housing costs, are also tax-free. Many states offer tax deductions or credits for contributions to in-state 529 plans. The different advantages of this account are:

• Investors enjoy tax-free growth and withdrawals for education.
• Generous lifetime contribution limits, which are often over $300,000.
• The account can be transferred between family members.
• Investors also enjoy some state tax benefits depending on residency.

Investors looking to get a 529 college savings plan can enroll in any state’s plan, as individual states typically sponsor these plans. Some popular plans include New York’s Direct Plan, Utah’s My529, and Nevada’s Vanguard-powered plan, which are usually set up online in under 30 minutes.

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