Investment Tips: Paying For Investment Advice

Information on contacting an expert to help with investing. Ideas about expressing your goals and making the most of work with a CFP.

Deciding when to pay for investment advice is a tricky question. The right answer from the right person could save you lots of money and time. When you decide to begin investing several questions immediately come to mind. By far one of the most often asked is whether or not you should pay for investment advice. The answer to that question is dependent upon your personal situation. There are four specific circumstances where it is probably a good idea to pay for advice.

For a beginner who is unfamiliar with investing, it is wise to pay a financial specialist just so you understand the basics before you set up an account. The beginner category includes the obvious like someone starting a new job. It can also apply to older people who haven't begun investing yet.

Another group of individuals who should consider paying for investment advice are those facing huge lifestyle changes. For instance, if you've decided you want to retire in five years, one of the things you should do before you make that change is examine your financial goals. While you can do this on your own another person can offer you a much needed perspective. You might be unsure if it makes sense to expand your life insurance or exactly how much money you'll need once you've left your job. Consultation with acknowledgeable advisor can help you decide exactly what to do.

The third category of individual who may need advice is someone who inherits a large sum of money. If your great Aunt Ethel died and left you the Park Avenue Penthouse, it's wise to consult with someone familiar with real estate before you make any further decisions.

Many people turn to their accountant for help while filing their annual tax returns. This is a good idea if numbers are not your strong point. It's also a good idea if you've moved from another state or even if you decide you just don't want to deal with the mound of paperwork involved. Make sure your accountant is licensed by the state before you hand him your business. Another alternative is a computer program that does your taxes for you. There are numerous versions available for purchase.

Once you've decided you need advice there are several ways to get it. One of the best ways is to find a few good books on the subject. Pick up a basic economics book or start reading the local business section of the newspaper. Read any advice carefully. If someone recommends a stock make sure they're doing so because they believe it's a good investment. They should not have a vested interested in pushing up that company's stock prices.

If you still have questions you can't answer consider a consultation with an accountant or even a Certified Financial Planner. Many stockbrokers will also work with you to design an investment strategy that meets your needs. This latter source should be investigated carefully before you make a commitment. Find out if the broker is paid by the amount of trades you make. If true, consider switching to someone who is paid for services or overall performance instead. The commissions could tempt him to give advice based on what will net him the highest paycheck rather than what's in your best interest financially.

Decide in advance how you want to pay. Some professionals work on an hourly basis while others may prefer to collect a percentage of your portfolio. Payment by the hour is often best for beginners. As your wealth grows it may make sense to pay someone to manage it in return for meeting certain financial milestones. You can also look in the phone book for non-profit organizations that offer low cost financial counseling for people who fall into certain situations or income ranges. At tax time many libraries offer inexpensive tax preparation services that are definitely worth a close look.

Before you meet with this person sit down and do your homework. Take a close look at your goals. If you're trying to decide if you should retire in Mexico or Canada, it's a good idea to find out as much information about both places before you sit down with someone. Another question you should decide in advance is your tolerance for risk. If you're uncomfortable with the thought of losing a single penny don't forget to emphasize this fact. If you don't blanch at the thought of risking your entire portfolio to seek high returns, let your accountant know beforehand. Whatever you do not hesitate to ask questions. You're paying for this person's time. You should make the most of it.

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