A financial account is a record within a country’s balance of payments. It keeps track of the change in ownership of foreign assets and liabilities.

It is made up of these main parts:

• Direct investment: Investing in long-term projects, such as building factories or buying a large amount of shares in a foreign company.
• Portfolio investment: Buying financial assets like stocks or bonds without gaining lasting control over the company.
• Reserve assets: Foreign currency and other assets held by a country’s central bank.

When a country has a financial account surplus, more money is coming into the country than leaving it. This account helps show how a nation pays for its spending or saves its extra income from trade.