Growing Your Money: 3 Questions You Should Always Ask Your Financial Advisor

Monday, July 20, 2020, 6:00 AM | Leave Comment

Making the decision to invest requires great thought and planning.

Investing is something that should never be taken lightly, even if you’ve seen success in it before.

In order to keep things from going haywire, you’re going to need the expertise of a financial advisor.

A financial advisor’s job is to mitigate the risks involved with finances and ensure financial gain for their clients.

Your financial advisor can answer a lot of questions about a lot of different scenarios and eventualities, but there are some questions you should always ask.

Growing Your Money: 3 Questions You Should Always Ask Your Financial Advisor

  • What Type of Account Should I Open?

    This is one of the most common questions all financial advisors hear. There are four types of accounts associated with investment. Each of these accounts are unique and come with their own pros and cons.

    1. Individual Brokerage Accounts

      Individual brokerage accounts are what many investors use when they’re starting out. Even successful investors use these accounts due to their amazing flexibility. The only major drawback to these accounts is that taxes are applied regardless if an investment is going in or out of the account.

    2. 401K Accounts

      401k accounts are a bit more complicated than an IBA. These accounts are used by employers to give their employees a chance to save for their retirement. Taxes aren’t deducted when money goes into the account, so the amount is completely raw. However, taxes will be automatically deducted once the money is withdrawn.

    3. IRA Accounts

      IRAs, or individual retirement accounts, are similar to 401ks. The differences lie within the specific types of IRAs. Most investors use a traditional account or a Roth account. A traditional IRA will charge taxes if someone isn’t at least 60 years old. They’ll instead be charged a 10 percent tax rate if they’re 59 or under.

      Roth IRAs are slightly different as instead of paying taxes after withdrawing, you pay them when the money is deposited. Basically, it’s paying for something beneficial later down the road.

    4. 529 College Savings Accounts

      Finally, a 529 college savings account is an investment account that’s primarily for a person’s education. Like a Roth IRA, you’ll be taxed while depositing, but not when you withdraw.

  • What Investments Work Best With My Accounts?

    Your finances are as unique as you are, so the type of account you open depends on your individual wants and financial needs. Together, you and your financial advisor will review your financial picture and goals. Then, they will advise you of which type of product is likely to yield the best result.

  • What Are the Associated Risks?

    Finally, as an investor, you know that there is a lot of risk involved when it comes to investing. A financial advisor, like Michael Sobota, will always warn you of these risks before you make an investment. Granted, it does depend on what you’re investing. For example, if you’re investing in stock, there is a chance you can lose money should the stock drop too much. Your advisor will steer you in the right direction of when and when not to invest.

Although investing is a responsibility, financial advisors are there to keep you financially stable. Always remember to ask your advisor these questions the next time you’re looking to invest.

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