Investing money in the stock market? We explain what you need

A custody account is a place to store securities such as company shares, bonds or fund shares. It provides the necessary infrastructure for trading, i.e. buying and selling securities. These transactions are processed via the custody account, while the individual holdings are updated on an ongoing basis.

You can manage and monitor your purchases and sales from the comfort of your own home or while travelling. Income from securities, such as interest and dividends, is credited to the account associated with the custody account.

One custody account, three options

There are three ways to manage a custody account: self-management, management by a professional asset-management company, and a combination of the two.

1. Independent decision-making

With self-management, you make all the investment decisions yourself. You choose which securities to add to your portfolio and you are willing to monitor their performance actively. You keep abreast of changes on the market in order to make the best possible investment decisions. Monitoring the market takes a lot of time. The more individual shares you hold, the longer it takes to monitor your portfolio.

2. Management by professionals

With professional management, you leave the investment transactions to fund managers or financial advisors. They select the securities according to your needs and develop an investment strategy that matches your appetite and capacity for risk. They keep an eye on your portfolio at regular intervals and adapt it to changing market conditions.

3. Obtaining expert know-how

In the mixed form, you are responsible for compiling and managing the investments in the portfolio yourself, though you occasionally draw on expert know-how, for example in the form of lists of recommendations for attractive investment, ­investment ideas or discussions with client advisors.

Which option is best for you depends on how much time and effort you want to put into managing your custody account. Please note: consultancy and administrative services are almost always subject to charge.

Remember the fees

There are also other fees, such as an annual or monthly custody account fee. The exact cost depends on the securities account volume, i.e. the total value of the company and fund shares in your securities account.

In addition, with the exception of professional management, you pay a fee whenever you buy or sell securities, be it a fixed amount per transaction or a set percentage of the transaction volume. Before opening a custody account, you should compare all the fees.

Tip: Many banks charge lower custody account fees for in-house funds. This is the case at Migros Bank.

* Angélique Schweizer is a client advisor at Migros Bank and an investment expert.