Your Guide To Using A Financial Advisor The Right Way

5 Steps To Building Your Financial Foundation

When a building is constructed it needs a strong foundation to withstand the test of time and the environment around it. The same holds true for your finances. If you are to financially withstand the test of time, you need a strong financial foundation. If your financial foundation is weak, it will crumble. Everyone's financial circumstances are different; so some of the steps outlined below may apply to your personal situation and some may not. To evaluate your personal financial foundation you should review your life insurance, retirement investments, disability and health insurance and annuities. Another factor that will help to stabilize your ...

Life Insurance Settlements|A Financial Tool

Under certain circumstances your life insurance policy can be used as a life settlement. In tough economic times, life settlements tend to be on the rise; but they are not a good financial move for every life insurance policyholder. Check with your financial planner before making a commitment to a life settlement transaction. If your financial situation changes, maybe a job loss or divorce for example, you may consider a life settlement an optional source of funds; but do your research first. Many life insurance policyholders do not know what a life settlement is or that they may have the option to use a life settlement. Not all ...

Special Insurance|Long Term Care & Credit Insurance

Where do you go when you want to get a specialty insurance policy? Your insurance broker or insurance agent can both provide you specialty insurances. Keep in mind though that not all insurance agents or brokers are trained in the details of specialty insurance policies. Be sure to ask them about their level of knowledge before doing business with them. These specialty insurances are special because they are not standard policies...auto insurance and home insurance are standard insurance policies. Some examples of specialty insurances include long-term care insurance, credit insurance and blue cross insurance. These are considered specialty insurance products because they are usually purchased only for ...

Compare Car Insurance

Compare Car Insurance If you want piece of mind when you compare car insurance companies and auto insurance rates - know the reputation of your car insurance company. If you ever have to negotiate an insurance settlement due to a claim, a reliable insurance company will make the claim process seamless. A reputable car insurance company generally retains good, reliable insurance agents. The value of a good agent is their advice. Your personal insurance needs and thus insurance coverages will vary during the different stages of your life. And a good insurance agent will guide you accordingly When you are single you will ...

Health Insurance Online

When insurance sales agents talk to you about budget insurance, ask if they are referring to health insurance online, short term health insurance or temporary health insurance. Budget insurance can be any one of those health insurance plans. Temporary health insurance, short term health insurance and health insurance online can usually offered at discounted premiums, which is why they can be considered as a budget insurance. Budget insurance policies generally do not have a personal, direct agent that you work with, but instead an individual licensed to sell insurance through a toll free phone number. The advantage of that is they are ...

Direct Insurance or Group Health Insurance

Direct insurance or direct purchase is a type of individual health insurance vs a type of employer or government insurance plan. Individual health insurance is purchased by an individual from some private insurance company, vs received from ones employer or a government program. Individual health insurance is usually purchased by the self employed, or someone who works part time and is not covered by employer benefits. Sometimes someone who retires before they are eligible for medicare purchases direct insurance. When purchased through ones employer or union, health insurance plans are referred to as a private health insurance or group health insurance. These ...

Classic Car Insurance or Van Insurance

Classic car insurance Van insurance insurance Whether you have auto insurance, motorcycle insurance, van insurance or classic car insurance - the purpose of your insurance policy is the same. That purpose is to pay for accidents that may occur. How each policy goes about paying your accident claim may be different, but the purpose of the policy is the same. A very basic auto insurence policy includes comprehensive, collision, medical and liability. However, specialty auto insurance products, such as, motorcycle insurance, van insurance and classic car insurance sometimes need different coverages than the basic insurance policy coverages. The reason for this is ...

Make Sure You Meet Car Insurance Requirements

The costs involved with owning a car go beyond just the gasoline you put in it, the maintenance and the repairs you make to it. You also have to include the cost of car insurance. If you own and drive an automobile, having current car ins on that auto is required by law.You cannot wiggle out of that law. If you drive a car and don't have car insurance on it, you are breaking the law. It can get expensive if you get caught driving without car insurance, so do the right thing, if you own a car, buy car insurance. Minimum ...

Health Insurance Brokers or Online

Obtaining health insurance quotes is a fairly simple process. You can work through health insurance brokers or get a health insurance online quote. When you work with a quote online, you may become confused about the insurance terms that are used. Or you may not know which insurance product best fulfills your insurance needs, in which case you may want a health insurance broker. At any point while working the quote online, you can engage a health insurance agent or broker to work with you. Simple contact the agent listed in the contact information on the site with the quote information. What ...

House or Fire or Homeowners Insurance

House insurance is sometimes referred to as fire insurance or homeowners insurance. In addition to covering claims for home fires, most house insurance policies also cover claims filed for wind, lightening, hail, smoke, explosion and vandalism. Check your personal policy. Most fire insurance policies do not cover for flooding. Flooding is generally excluded from a fire insurance policy because floods can only be covered under a flood insurance policy purchased from the federal government. Check the government’s website for additional flood information. Water backup is different from flooding though. If your policy carries the proper coverages water backup can be covered under ...

Insurances

Insurances are not all the same - insurance agents are not all the same either. Some insurance agents specialize in property casualty insurance, while others specialize in health insurance. Property casualty insurance agents sell auto and home insurance; RV insurance and umbrella insurance. Agents who specialize in health insurance, sell group, personal health insurance and supplemental health insurance. Since their expertise is different, their training and licensing requirements are different. Personal health insurance and supplemental health insurance both ask medical questions, so the agent has to be trained accordingly. But when you buy RV insurance or umbrella insurance you are not ...

Topics: 401K Plan, Credit, Financial, Investing, IRA, Other, Retirement Added on: Friday, July 3rd, 2009 Posted by: yourwealthpuzzle Leave a Comment

A financial advisor can be an invaluable tool. But you must first understand what they can offer. Financial advisors are not intimidating if you know the right way to use their services. The value of a good financial advisor is their ability to identify and teach.

Everyone knows what financial advisors are supposed to do for you: give financial advice and provide investment information.

You can use your advisor to teach you about different investments. The advisor should be able to provide you information about the two most common investments individuals use when planning for retirement: IRA’s and 401k’s. They should be able to advise you on the difference between investing for example in an IRA versus 401k and Roth IRA’s vs Traditional IRA’s.

You should also use your financial advisor to teach you good financial habits. The advisor should then hold you accountable for changing the old habits into new ones. By developing new financial habits, you may avoid some unnecessary work like credit repair. Let’s review how to get the most out of your financial advisor.

How To Use A Financial Advisor The Right Way:

Teaching You Investments

Before seeking help from a financial advisor, knowing some basic investment information ahead of time will prevent you from just following them blindly.

Since 401k’s and IRA’s are the two most common investments used by individuals to plan for their retirement, let’s review some basic information about them.

IRA vs 401k

IRA’s and 401k’s have different financial advantages.
Your age, income level, time horizon and job stability all help to determine if an IRA or a 401k works best for you.
If your employer matches your 401k contributions, a 401k plan may be a better option than an IRA because of the free money you get from an employer match.
Sometimes you can invest in both an IRA and a 401k plan; depending upon your income level.
Both may or may not be tax-deductible, depending upon your income level.
Both are tax-deferred.
You can take out a 401k loan, but you cannot take a loan out against an IRA.

Roth IRAs vs Traditional IRAs

Roth IRA investing is not for everyone.
If you are close to retirement, a Roth IRA is not a good investment for you.
If you cannot keep the money invested for at least 5 years, a Traditional IRA is a better choice than a Roth IRA.
Traditional IRA’s do have restrictions on when you have to take a distribution.
With a traditional IRA, you must begin minimum distributions at age 70 1/2.
With a Roth IRA, there are no distribution requirements.

Identifying Financial Habits

A financial advisor should help you identify your bad, bad, bad financial habits; and teach you how to modify them into good, good, good ones. Identifying a few of your own financial habits will help when you meet with the advisor.

Financial Habit # 1 – Carrying credit card balances.

One of the first bad habits that financial advisors usually advise clients away from is carrying high credit card balances.
Carrying credit card balances could lead to credit repair that you could avoid.
Making all of your purchases with your credit card and then just making the minimum payment will double and even triple your original debt.
That is a very bad, bad, bad habit to start because you never get ahead, you will always be in debt.
A better habit to develop is to pay off your credit card balance every month and not carry a balance.
Making minimum payments on credit cards needs modification.
The first step towards that habit is to not buy something if your only way to pay for it is on a credit card.
Your financial advisor may have additional suggestions.

Financial Habit #2 – Taking out 2nd mortgages.

This habit of taking out a 2nd mortgage to pay for the purchase of a big screen television or a new car is strongly discouraged by financial advisors.
The interest on a 2nd mortgage is usually higher.
You end up paying twice as much for the merchandise due to the interest.
The payback period is usually shorter.
A good financial advisor will tell you that if you can’t afford it do not buy it until you can afford it.

Financial Habit #3 – Separate your paychecks.

Get in the habit of using your first paycheck of the month to pay for your fixed expenses.
Your fixed expenses would be: mortgage or rent, car payment, real estate taxes.
Then use your second paycheck to invest and pay for your variable expenses.
Your variable expenses would be: utilities, food, entertainment costs.

Working with a financial advisor is similar to working on a puzzle; there are many pieces; individually they make no sense, but when put together they make a beautiful picture. We have just presented you with a few of the puzzle pieces that you will need to work with a financial advisor on.

There are many, many other financial habits that individuals have. We just identified for you a few of the more popular habits.

Just as there are other financial investments that exist besides just IRA’s and 401k’s…we have just talked about those two because they are the investments most often used by investors for retirement planning.

Each investor has different financial needs and situations which is why you want to work closely with an advisor to identify your personal needs and direction.

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