Bank Trust Custodial Account

Bank trust custodial accounts may not sound familiar, but IRA probably does, right? An IRA (Individual Retirement Account) is a type of bank trust custodial account. In this case, the investor contributes into the account, and the bank invests the money into interest-bearing investments, or the investor picks what it is invested in, case-by-case.

There are two types: one where the bank invests the money, and self-directed accounts, where the investor manages the investments. As you can imagine, sometimes banks are a bit reluctant to be custodian (coordinate, basically) the self-directed accounts, because they're not picking the investments themselves, and a brokerage fee usually applies. Often the self-directed accounts allow for investments outside the usual dull shares, etc., and allow for investing in things like real estate, gold, or even horses, if you're a racing fan.