Smart investing, cousin Krishna and $20,000

It’s not an easy or a quick process, to become wealthy. Actually, it takes a lot of discipline and hard work. However, recent history has shown us that becoming wealthy can indeed happen overnight. Over the past few years, we’ve seen many people strike it rich through the stock market. It seems that everywhere we looked there was someone else, and usually a young someone else, who had just suddenly become worth millions of dollars. But counting on the stock market to make you a lot of money very quickly is not only risky, it’s also highly unlikely, especially now. Plus, if you had known then what you know now  would you have done what it takes to become rich off the stock market? Probably not. Buying low and selling high go against human nature. Just ask those who invested in the United States and  bought Yahoo! at more than $150 per share and watched the share price plummet to around $12 per share. The meteoric rise of the stock market in the 1990s was an abnormality. Will the stock market continue to go up? Sure, historically speaking over the long term it will. But the markets will continue to rise and fall all the time. Will it skyrocket the way it did in the 90s? No one can say. Investors today are smarter, younger, and have more time to wait to make the returns they want. Today’s market serves as a lesson of hurry up and wait. This is a road that the average investor just shouldn’t travel alone. Here’s the first secret that many wealthy people know: Hire a financial advisor to do some of the worrying for you.

What Is A Financial Advisor,
And Do You Need One?
“A Financial advisor? I don’t need one. My cousin Krishna is a whiz with investments and finances.”  If this is something you find yourself saying, stop. Unless your cousin Krishna has taken classes and passed comprehensive exams and works as a financial advisor, chances are you don’t want to trust your retirement to him. Cousin Krishna is probably not going to be able to help you decide if you need to invest in bonds or stocks or time deposits. Nor will he be able to advise you on what the possible benefits of investing in an annuity would be for you. The best answers to these questions, and others like them, come in the form of a financial advisor. A financial advisor is there to keep you educated and invested for the long term when the market goes down, as well as when decisions are to be made. Put simply, he can be your best friend. Financial advisors, or planners, work with clients to find the best for between the client and different investment vehicles. The last time you paid your car insurance, did your insurance agent offer you the chance to purchase a mutual fund through him? More and more insurance agencies, banks, and even Chartered Accoun-tants are getting into the investment business. Many of these people only promote and sell certain products and don’t cater to your specific needs. You may like Roytrin’s Global Growth and Income Fund, but that doesn’t mean that you should invest in every Roytrin fund. There are, perhaps, other approaches to investing that would better fit your needs. Every investor’s portfolio benefits from having choices available.

Financial advisors have many different investment vehicles at their fingertips that help their clients achieve their goals. Advisors focus on these goals and needs to decide which investment is best, rather than applying a cafeteria plan to each client. At some point in time, everyone will need the help and expertise that only a financial advisor can provide. They offer a well-balanced approach to your finances. Let’s face it, you may be too emotionally involved with your money to manage it properly. You have worked hard for your money and don’t want to lose it. A financial advisor is the third party to your financial situation. Just like you wouldn’t perform surgery on a family member, why should you perform surgery on your money?
Recognising the need for a financial advisor is the first step to taking control of your finances and increasing your wealth. Selecting the proper advisor is a harder task. This is a very important challenge. You need to find the right advisor for your situation. Receiving referrals from friends or family members is a good place to start. If they are willing to share the name of their advisor, that means that they trust him. However, if you are uncomfortable asking or don’t know anyone who uses an advisor, then you will be starting from scratch. There are a few things to keep in mind when selecting your advisor. First, don’t be afraid to interview your potential advisor or shop around. Most planners offer a free initial consultation. This will give you the chance to sit down with advisors and ask questions. Second, make sure you feel comfortable with your advisor. During your initial meeting, gauge how you feel. Did the staff make you feel welcome? Do you feel comfortable discussing the most intimate details of your financial situation with this advisor? Do you think you can trust this person? If you answer “no” to any of these questions, then you should probably continue to look for an advisor. Third, make sure that any potential advisor is qualified. Nowadays, almost everyone can call themselves financial advisors.

Your Advisor — Good or Bad?
You’ve gone through the interviewing process with a number of advisors and have picked one. This person seems very knowledgeable, and you feel like this is a good fit. However, the time may come when you decide that your financial advisor is just not the right one for you anymore. That’s okay; it’s perfectly alright to switch advisors if you feel that your advisor isn’t doing the right thing for you. Do you understand what your accounts are doing and what they are designed to do? Here are some guidelines to help you make your decision: Although no one expects you to become an expert on every aspect of your portfolio, that’s what your advisor is for, you should have some understanding of its components. If your advisor recommends investing in an annuity, make sure you are familiar with what an annuity is. Don’t be afraid to ask questions; it will make you feel better. Be sure you are comfortable with the answers your advisor gives you, as well as with each individual product.

I have a client who invested $20,000 in a portfolio account. At the time he invested, I explained how it works and the pros and cons of investing in one. I made sure he understood the product. Since then, he has asked me a number of times to re-explain the account. While other advisors may become irritated at having to explain the same things time and again, I don’t. I’m glad my client wants to understand his investments.
(Continued next week)