Investment Accounts And How To Manage Them In Companio
Some fintech platforms, like Wise and Revolut, offer the option to convert your regular bank account into an "Investment" account. Instead of keeping your money in cash, they invest it in financial instruments such as bonds or stocks. This can potentially grow your money over time, but it's important to remember that your capital is also at risk.
When you activate an Investment account, your money is placed in a fund that invests in stocks, bonds, or both. This differs from a regular "cash" account, where your money remains static, neither growing nor at risk. With an Investment account, the value of your balance can fluctuate based on market performance. Each month, depending on the returns, you may see your balance increase—or in some cases, decrease.
These earnings are reflected as an added balance in your bank statement, typically shown as an additional line in the balance row.
Investment accounts are relatively new, and their implementation by fintech solutions like Wise and Revolut currently does not fully comply with OpenBanking standards. Specifically, the earnings from these accounts do not appear as transactions in your bank statements. For example, if your investment account earns €3.16, you won't see a corresponding €3.16 transaction entry; instead, your balance will simply increase by that amount.
This poses a challenge for accurate accounting. A key aspect of accounting is ensuring that the starting balance of a financial period, plus all transactions during that period, equals the final balance. The current handling of Investment accounts disrupts this process by increasing your balance without a corresponding transaction entry, making it difficult to reconcile your accounts.
We are actively working with Wise and Revolut to request that they include these transactions when data is retrieved through OpenBanking. In the meantime, we have developed a feature that allows us to identify potential Investment accounts. Once confirmed, we will adjust your balances by adding the necessary transactions to reflect any increases due to investment earnings.
If our system detects an unexplained mismatch in your balances, it may flag your account as potentially being an Investment account. You will receive an email notifying you of this discrepancy and requesting that you confirm whether your account is indeed an Investment account.
To confirm, simply log in to your dashboard, navigate to the Banks section, and look for the account labeled "Account Data Needed." By clicking "Confirm Account Type," you can confirm whether your account is an Investment account.
Please only select this option if you have activated an Investment account with Wise or Revolut. If you're unsure, you likely haven’t activated it. If you’re certain that your account is not an Investment account, please contact our support team. The balance mismatch may be due to another issue that needs investigation.
Once you confirm your account as an Investment account, our system will automatically tag it accordingly and add the necessary transactions to regularize your balances.
We believe that fintech providers like Wise and Revolut will address this issue in the future and fully comply with PSD2 OpenBanking standards. Until then, we appreciate your cooperation in helping us identify Investment accounts and ensuring your financial records are accurate.
How Do Investment Accounts Work?
When you activate an Investment account, your money is placed in a fund that invests in stocks, bonds, or both. This differs from a regular "cash" account, where your money remains static, neither growing nor at risk. With an Investment account, the value of your balance can fluctuate based on market performance. Each month, depending on the returns, you may see your balance increase—or in some cases, decrease.
These earnings are reflected as an added balance in your bank statement, typically shown as an additional line in the balance row.
The Issue with Investment Accounts
Investment accounts are relatively new, and their implementation by fintech solutions like Wise and Revolut currently does not fully comply with OpenBanking standards. Specifically, the earnings from these accounts do not appear as transactions in your bank statements. For example, if your investment account earns €3.16, you won't see a corresponding €3.16 transaction entry; instead, your balance will simply increase by that amount.
This poses a challenge for accurate accounting. A key aspect of accounting is ensuring that the starting balance of a financial period, plus all transactions during that period, equals the final balance. The current handling of Investment accounts disrupts this process by increasing your balance without a corresponding transaction entry, making it difficult to reconcile your accounts.
What Can You Do?
We are actively working with Wise and Revolut to request that they include these transactions when data is retrieved through OpenBanking. In the meantime, we have developed a feature that allows us to identify potential Investment accounts. Once confirmed, we will adjust your balances by adding the necessary transactions to reflect any increases due to investment earnings.
How to Confirm Your Account as an Investment Account
If our system detects an unexplained mismatch in your balances, it may flag your account as potentially being an Investment account. You will receive an email notifying you of this discrepancy and requesting that you confirm whether your account is indeed an Investment account.
To confirm, simply log in to your dashboard, navigate to the Banks section, and look for the account labeled "Account Data Needed." By clicking "Confirm Account Type," you can confirm whether your account is an Investment account.
Please only select this option if you have activated an Investment account with Wise or Revolut. If you're unsure, you likely haven’t activated it. If you’re certain that your account is not an Investment account, please contact our support team. The balance mismatch may be due to another issue that needs investigation.
Once you confirm your account as an Investment account, our system will automatically tag it accordingly and add the necessary transactions to regularize your balances.
Looking Ahead
We believe that fintech providers like Wise and Revolut will address this issue in the future and fully comply with PSD2 OpenBanking standards. Until then, we appreciate your cooperation in helping us identify Investment accounts and ensuring your financial records are accurate.
Updated on: 26/08/2024
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