Retirement - let the experts help you

What To Decide Before You See A Financial Planner

If you're about to see a financial planner for the first time, you're about to get efficient, professional help with what can be a confusing problem. But you shouldn't go in with no idea of what you might want to do with the money, and you should give serious thought to how you plan to handle long-term investing. Your financial planner will help you learn about different investment products (i.e., account and fund types), but you need some sense of how comfortable you are with different aspects of investing as a whole.

How Comfortable Are You With Stocks?

Chief among these aspects is the volatility of stocks. Over time, stocks can be a good investment, but you have to be comfortable with ups, downs, overemotional financial reporting in the media, and your own sense of risk and safety. If you are not comfortable with the idea of stocks, that's fine; you don't have to invest in anything you don't want to. Be aware that many other investment funds contain stocks along with other types of investment vehicles, but these are generally more balanced and less of a risk than pure stocks.

Have You Considered Roth IRAs?

You don't need to have all your money in fancy products; sometimes the basics are just fine. You should have an appropriate mix of the two, but decide if you want the good old Roth IRA to be a part of that. Your planner can help you set one up. Roth IRAs are the ones where you put post-tax money into the account and withdraw money tax-free, and after age 59 1/2, you can withdraw the investment earnings without paying a penalty. They are simple and easy to manage because as long as you make it to 59 1/2, you get that income tax free.

How Will You Handle Ups and Downs?

Financial investments can be a bit of a rollercoaster ride. Even the most basic of funds can see ups and downs in interest rates. As you get into higher interest-rate ranges, you can also experience more volatility, and you have to decide what you'll do if things get really wild. For example, say you decide to put a little money into stocks, just for kicks, and the market starts to swing like it did back at the beginning of the Great Recession. Your stocks tank -- they're still there and the company hasn't closed, but they've lost a lot of value. Will your strategy be to ride it out? Cash out in case you think the company is at risk? Buy even more stocks now that they're all cheap? Your answer to this will give you insight into how you really feel about risk, so think about this before seeing your financial planner.

Planners are going to put together an entire package for you if you ask them to, so it's better to have a sense of what you think your investments should be like beforehand. The more information you can give your planner up front, the easier it will be for him or her to create an investment plan for you.


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