Here’s the most-asked question I get asked at parties: where do you put your money to make it grow best?
It seems like an easy question but the answer is complicated, isn’t it?
Gurus who want to keep you in the dark use labels for investing like “hard” and “difficult”….and it can be. However, on the most basic level, it also can be the easiest thing in the world. You just need to start.
But why don’t people start? Most people I worked with were worried they be wasting their money on horrible investments. They were frozen and couldn’t choose the right path. I can see their point: the last thing anyone wants to do is invest all of their money and lose it quickly.
The good news? It is’t too late to start. At any age you can let your money start making you money. If you don’t want to go it alone, let’s talk about how to choose investments and finding good help.
To us all, the idea of investing seems foreign at first. “I put my money in this thing and it makes money on it’s own? How does that work?” At first, ideas like “bonds”, “stocks”, “REITs” and others are like reading a new language.
That’s why you don’t start with the types of investments.
Start with your goals. Some people invest to make money quickly in the stock market while others are trying to make money slowly over time. Once you know your goal, then determine your risk. Different options offer different risks/rewards, so starting with what you want out of an investment drives the decision of where to invest. Investors with large sums might choose to invest in individual businesses while smaller investors can pool their money by buying into a mutual fund or exchange traded fund.
How Should You Invest Your Money….Personally?
Here’s the deal: I don’t know.
Since there are so many investment options and an unlimited number of goals you could be trying to achieve, you might decide to hire a consultant. Good helpers in your corner can help you decide what is best for what you want and the time-line you are looking at. When I was an advisor, I’d limit the choices to the ones that really mattered so my clients could focus on making money instead of worrying about just how many choices there were. Skilled advisors don’t just throw investments your way….they think of strategies that you may not have considered. Investing decisions might need to happen quickly, and if you don’t monitor your investments you could end up not only losing money but losing confidence in your strategy, which is even worse.
How do you find a good firm? I’d talk to friends first. Conduct interviews with advisors using some great tools like this checklist from FINRA. Good investment firms expect to be asked about their performance, how they work with clients and specifically what you’ll need from them. A good firm should feel like you’re hiring a partner more than buying a sales pitch.
What Else Can An Investment Company Provide?
I was always surprised when people would only want to deal with me for one or two investments. In fact, I became adamant that I knew about your whole portfolio, whether I was helping “babysit” your money or not. Every company is different, but many offer more than just investment consultation. Instead of finding someone to help you invest (something you can do on your own), look for someone to help you monitor your investment, give you advice along the way, and help you manage your tax liability, estate planning and budget issues. Not only should your advisor help you make the right decision based on your wants and needs, but they should make sure that you manage your portfolio well when markets turn sour (and they will). Without a firm hand on the rudder, you might spend too much time looking at your investment and trying to determine if it is going well. Investment statements and prospectuses can also be ugly beasts as well and a good company can help decipher what’s important information and what’s garbage.
Ultimately, your investment decisions are up to you but a good pro can add to the bottom line. Find a company that can earn your trust and start letting your money make money.
Photo: Trading Academy