Invest As an Individual
Investing as an individual is a quick and easy way to access financial markets. Visit a broker or sign up for an online trading account and you're ready to go. You're free to cancel your account or quickly transfer your investments to another brokerage. Both actions are difficult and time-consuming to do as a holdings company.
Invest As a Holdings Company
A holdings company, also known as a “pure holding company,” is a corporation with the sole purpose of owning another company’s stocks. Its earnings are derived from the earnings of the assets it holds. These earnings are paid as dividends, which may present tax benefits if managed well. Creditors are kept away because shareholders of the holding company are not exposed to the risks of the assets it holds. The ownership structure of holdings companies also helps to simplify estate processes.
Individual investing is a straight-forward way for investors to access the financial markets. If you’re a high-net-worth investor, holdings companies present a higher level of tax efficiency and creditor protection. However, compared to individual investors, holdings companies have higher administrative, accounting and legal costs. Consult a financial planner, lawyer or accountant for professional advice regarding the finer points of holdings companies.