Finally, you should meet with your chosen financial planner and begin to invest. You and your financial planner will consider your goals, then figure out a workable plan for you to get there. He or she will likely give you a certain amount of money you should invest each month to work toward your goals. To meet this number, you may have to cut spending or stick to a budget.
You should continue to meet with your financial planner on an annual basis. You should also meet with him or her if you experience life-changing events such as marriage, having a child, or going through a divorce. Your goals may change over time, and it is important to clearly communicate these goals with your planner.
- Most good financial planners will recognize and emphasize the importance of having an emergency cash reserve on hand. This means that you should have several months’ worth of income in a savings account that is easy to access if you lose your job or another true emergency arises. This will allow you to leave the money you have invested in the market.
- Financial planners should look at your entire financial picture. They may make suggestions on a percentage of your income to invest, address your insurance needs, or managing your risks and your taxes. It is important to carefully consider this advice, but you should be comfortable with any product that you choose.
- You should also consider the way that your financial planner is paid. If it is purely via commission, then you need to take that into account when they suggest certain products and investments, since they may be getting a cut.
- You should be able to completely understand an investment before you make it. Your financial planner should be able to explain the difference between annuities and mutual funds, as well as the risk and rate of return for each investment. If you cannot understand the investment or if your planner does not seem able to explain it, you may want to find a new financial planner.