What Is a Pooled Account?

Investors can pool their money in a portfolio.
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The perks of being single are countless, but the minute you get hitched to the love of your life, your financial position sails off in a whole new direction. Gone are the days when you had no worries of tomorrow and could invest in any risky venture promising a large return upon maturity. Now you need to think smart and efficient, and you can begin by investing your savings in the right places to secure a better future for yourself and your loved ones.

Higher Returns

For opportunity-seekers, pooled accounts can be a viable tool to invest in stocks and bonds. Pooled accounts place your assets into sub-accounts accumulated among other investors and managed jointly by a sponsor -- that is, a group of investors invest as a unit. The proceeds accumulated from various investors labeled as sub-accounts may be invested in higher-return financial instruments. To secure each investment, the sponsor practices proper record-keeping procedures, highlighting your share in the pooled principal and the amount invested on your behalf. The interest on the investments is divided among the owners of sub-accounts in shares equivalent to the principal amount they contributed to the pooled account.

Lower Management Cost

Investment in pooled accounts helps you minimize administrative and management costs. Because a single manager or firm handles your assets, management fees are spread across all the sub-account holders. This gives you the added advantage of using your investment more efficiently to generate higher returns. The broader the portfolio of account holders, the lower the management fee allocated per account. A little saving can do wonders in the long term, and committed partners can instill a strong foundation for a happily ever after.

Investment Diversification

For many young investors, the idea of generating high returns is more appealing than working in a safe setting of fixed return rates. The angel on your right shoulder -- for example, your highly responsible spouse -- may remind you that anything that looks too good to be true may well be just that; however, playing it too safely might hinder your chances of mastering the art of high return. Pooled accounts offer investment diversification while limiting risk. At times, the value of individual stocks and bonds can fluctuate in negative trends; thus, it is always advisable to diversify your investments in a portfolio of financial instruments. Still, you should proceed with caution. Pooled accounts do not offer the same guarantees as your bank account.

Rebalancing

If you recently began your professional career and are seeking reliable options to earn high returns, a pooled account can be an ideal option for you. An ingenious feature of pooled account is the automatic rebalancing that adjusts your portfolio over time. Through the years, your investment goals may take new directions. High-risk investments that seemed attractive a few years ago now may be viewed with criticism, and you may seek other investments. Portfolio management can be a pain for individual investors who are too busy or lack the necessary expertise. Pooled account managers support the accounts through thick and thin, making investment decisions for you.

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