Your adviser can be an excellent resource to help you choose investments that will meet your goals. That’s because advisers often have great research tools and information that are not available to the average investor. However, one of the first rules of investing is this: Never invest your money in something you don’t understand. If your adviser recommends a certain investment, make sure you find out:
- How it works
- How it fits your goals
- How it fits your investing style.
What should I ask my adviser? Why?
What to ask about an investment |
Why you need to know |
How does it work and why should I buy it? |
Smart investors only invest in things they understand and that fit their goals |
How will this help me reach my goals? |
Ask how much you can expect to make from this investment and how long you will hold it. Can you earn enough money to reach your goals? |
What are the chances I’ll lose some or all of my money? |
You must decide whether you are comfortable with the level of risk for each investment |
Are there any sales fees? Are there any other costs? |
You need to know all of the charges and fees to understand what you’ll really make from an investment. Be sure you know when you have to pay the fees too, so there won’t be any surprises |
When can I get my money back out? What happens if I need it sooner or change my mind? |
This helps you avoid tying up your money if you don’t want to, or aren’t sure. Make sure you know if there are any penalties for taking your money out early |
Are there other choices that would help me meet my goals? |
Ask how other options compare with what your adviser is recommending. Make sure you make the best choices for you |
Remember: Smart investors ask lots of questions and communicate clearly.
Don’t stop asking until you’re sure you understand what your adviser is suggesting to you. You need to know how each investment will help you achieve your goals, and you must clearly understand what it will cost you and the reasons for and against it.