February 07, 2019

How Can I Take Control of My Money?

Kevin Ellman CFP

Kevin Ellman CFP
CEO/Wealth Preservation Solutions

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If you want to take control of your money, the first thing you need to do is learn the basics of investing so you can better navigate the financial sphere. Something as “simple” as knowing the difference between a stock and a bond will help you in your financial endeavors.

Next: Get the facts. Find out what you have. What are your investments? What are your expenses? What is your income? You can’t move forward until you know where you stand today.

You should get a second opinion from someone other than your existing advisor, who can really help you understand your current financial situation.

In this process, you also need to layout your goals and objectives, your risk tolerance and your time horizon.

Goals and objectives: If you know where you are and what you have financially, you can start to think about what you want to do. Do you want to sell your house and move? Undertake a new business venture? Do you need to set money aside to pay for your child’s college and education?

Risk Tolerance: How much risk are you willing to take with your money? How much risk can you afford to take? Can your financial situation handle some fluctuation?

Time Horizon: Think about your age. If you are 45, you have many years to continue to invest your money. If you make a mistake financially, you have time to recover. You also, however, need money to support your needs for a longer period of time. If you are 75, while you have less time to make up for a financial blunder, you don’t need your money to last another 50 years. In addition, your time horizon requires you to ask the question: When will you need to spend a lot of money?

Once you know where you stand, you can direct an advisor to implement your plan, or you can do it yourself.

If you use an advisor, be sure that you understand how they are compensated. Ideally, your advisor’s financial interest should be aligned with yours. Consider the difference between a fee-based advisor and a commission-based advisor. A fee-based advisor gets a percentage of the money that is under their management. This means that when you make money, they make money. The incentive for a fee-based advisor is to make your money grow. When you use a commission-based advisor, they make money when you buy and sell a stock, bond or mutual fund, whether or not it is a profitable decision. This is not necessarily bad, but it is an important distinction that you should be fully aware of.

Comments? You can contact me directly via my AdvisoryCloud profile.

Watch Kevin Ellman’s video Finding the right financial advisor.

Learn about the Wealth Preservation Solutions Estate Planning and Asset Protection Process.

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Wealth Preservation Solutions is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra AS are not affiliated with any other entity listed herein.

This article is for informational purposes only and is not intended as an offer or solicitation for the sale of any financial product or service or as a determination that any investment strategy is suitable for a specific investor. Investors should seek financial advice regarding the suitability of any investment strategy based on their objectives, financial situations, and individual needs. This article is not designed or intended to provide financial, tax, legal, accounting, or other professional advice since such advice always requires consideration of individual circumstances.

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