Regrettably, some people don’t begin planning their retirements soon enough, nor do they fully grasp the principles of growing retirement income. This is due in part to the lack of reputable retirement investing advice. There’s actually plenty of good free investment advice out there, but payment to a consultant is usually involved if you want custom information. As a result, some people try to fend for themselves, only to find out later that they’re not where they want to be financially. This is why experts recommend using financial pros to develop retirement plans. And since it is your hard-earned money, you owe it to yourself to do your homework first so you can ask intelligent questions questions of the financial advisor and understand the answers. Learning the financial ropes a bit in advance will also save you money if your advisor charges an hourly rate.
Here are some of topics you should know before you pay someone for financial advice:
How insurance impacts your financial bottom line
Some people don’t need information on level term insurance and other forms of insurance protection because they don’t have dependents that make life insurance necessary. But those who do should make sure they understand what they’re buying. Understanding the difference between cash value, term life and variable universal life (VUL) will allow you to pick the option best for you. And I’ll clue you into one fact right from the start: cash value policies, such as whole life and universal life can usually be counted on to produce a bad return on investment and will probably cause your family to have inadequate coverage. So you should keep that in mind when you talk to a financial consultant.
The difference between load and no-load mutual funds
Some financial advisors work on commission only, so they only make money if they steer you toward “loaded” funds (funds with service fees). This is why it’s sometimes better to pay by the hour for financial consulting, so you can get objective advice. If you study the difference between load and no-load funds, you’ll see why.
Have an idea when you will retire and how much you’ll need to save
It’s a good idea to know about when you’ll retire and how much money it will take to maintain your lifestyle before you meet with a financial planner. That will help him form a plan.
Once you’ve done your homework, there’s just one more thing to do: make some inquiries of your friends and family if they can recommend someone before you pick a financial consultant to work with. Once you have that information, check whether the candidates have built wealth in their own lives. If they haven’t been able to do it for themselves, they won’t be able to do it for you!
