General Information
Rule No. 1: Take control of your money! Do not leave your retirement funds in your previous company's 401K or the institutions 403B. Educate yourself about your money and your options and choices.
Rule No. 2: Talk personally to a financial advisor and keep him/her informed about changes in life, financial needs, etc.
A. If the advisor cannot write Limited Partnerships, Direct Placement Programs, Variable Annuities, stocks, bonds, or provide Third Party Money Management, then go to another advisor who can provide these services when they're appropriate and needed.
B. Find an advisor who is committed to the same Christian values as you do and believes in Bible based investment principles.
C. If he or she has difficulty relating to you or explaining the products, principals of investing, or financial relationships, it is imperative to find a new advisor who can.Rule No. 3: Learn! Read magazines, journals, etc. Discuss items you think apply to you with your financial advisor, but do not act independently from him or her. Make sure you use all of the players on your team, these should include your:
A. Financial Advisor
B. A CPA (Certified Public Accountant)
C. Attorney (who should specialize in wills, trusts and Estate Law)
Costs
What you should ask about financial planning costs:
A. Can the financial advisor function on a "fee" based basis?
B. Can the advisor waive fees and accept "commissions only"?Your advisor should not charge you both fees for the planning and then make commission from products he/she writes for you. You should feel free to discuss fees/costs with your advisor. You want your advisor to be in business year after year to serve you and you expect him to be paid for his professional services -- but not double bill you.
Risks
It has been stated that an overwhelming majority of the general public does not really have a grasp of what investment risk means; how to put it in proper perspective; or how to accept, reject, or manage risk.
Let's face it, everything has a risk. One could easily argue that there is no "perfectly safe" investment. The really essential task is to know the risk of each investment, balance your portfolio, and periodically rebalance the risk aspect of your portfolio based on:
A. Your age and pre or post retirement status
B. The economic conditions of the time
C. Your changing income needs
D. Change in tax laws
E. The changing dynamics of your family unit, dependents, health status, marital status within the family tree, ect.It's said that man must have a certain amount of stress in his life in order to grow and thrive. The challenge lies with how we cope with stress. When is too much stress too much stress?
Likewise, we must always cope with risk. But, when is something too risky? I'm sorry, but there is no answer for this. Sometimes a CD for 3 months, paying a mere .30 percent is not near risky enough to justify inclusion in a portfolio. CD's may seem fairly risk free to you, but if all of your savings reside in CD's at your neighborhood bank, you may be taking on an extremely high risk.
A worthy financial advisor must look at the big picture. He/she must be skilled in asking all the right questions. And then he must be able to translate the important issues and concerns to you. You need to know the risk involved with various asset classes, the need for diversification, and risk-reward relationships, the constraints and access related to potential liquidity demands.
Just like your ability to accept or cope with more stress will vary depending on a lot of things that may be going on in your life at the moment, likewise, your need and/or ability to accept more (or less) risk within your portfolio of investments will (in fact must) change from time to time, throughout your life.
In a Nutshell
You've been led to this web site because financial planning is a concern to you. Take the next important step. Get good guidance. Get a team that you can trust. A team that is skilled in steering you through the more complicated financial planning issues. This is what we do and we're here to assist you! The right counsel will more than pay for itself in many ways. Proper financial planning is truly cost effective.