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When to Be Happy with Your Financial Adviser and Rates of Return?

Updated on March 4, 2016
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Sheila is a kids' author who worked on Wall Street managing money. She loves to share how you can easily increase your net worth too!

Are You a Loaner or an Owner?

One of the most fundamental aspects to remember in personal finance and investing is to become an owner and not a loaner!

  • A loaner is someone who invests their money in a bank or a stock fund hoping for a modest return for the use of their money. They also rent instead of owning anything.
  • An owner is someone who has no debt and also owns his home outright.

Though stock investment is highly risky, it's worth the ride to help grow your retirement. Even though the accounts of a bank are safer, because, of the assurance of FDIC insurance funds, they do not outperform the growth of inflation. Besides, there are limits to their assurance. And you end up losing money in the long run, since, you must pay taxes on the interest earned.

The FDIC known as the Federal Deposit Insurance Corporation created by our Federal Government is an agency that assures the deposit of your bank funds in case a bank fails. The banks and stock institutions, then loan out their money at a higher percent point making a hefty profit in the interim.

Feeling Safe in the Stock Market May Cost You

Feeling safe will cost you heaps of income in purchasing power as taxable interest and inflation will eat away at your hard-earned money. It pays to invest directly into the economy to fund your retirement with Equity Mutual Funds, an aggregation of top ranking companies’ stocks pooled into a separate, fund group.

Therefore, if, one company does poorly in one-quarter another company in the mutual fund will generally do better. These profits can trickle down to pay dividends with an increase in the mutual fund’s share price, and capital gains.

The managing of Equity Mutual Funds by financial brokerage houses always maintains a professional management team that pulls together a group of individual investors into the global economy.

Your mutual fund investment will pay you dividends, and reinvest your profits by diversifying your investment into different companies. Over the long-term they outperform safe FDIC insured accounts. This lowers the high-risk venture of investing in individual stocks and losing the battle of safe investments, such as, certificates of deposits with the low-interest of savings accounts that do not even keep pace with inflation.

It's smart to spend wisely and save your money for future goals!

Get Your Money Advice from a Qualified Financial Source

A Financial Adviser is skilled in discovering growing funds.
A Financial Adviser is skilled in discovering growing funds. | Source
Money Grows on Hubs: Everyday Personal Finance Tips!
Money Grows on Hubs: Everyday Personal Finance Tips! | Source

Investment Modesty Goes a Long Way in Growing Your Money.

It's wiser to acquire some modest investment risk in exchange for reasonable rates of return over the long-term. This will solidify your investment return and protect your long-term financial goals like your retirement.

An investment in a mutual fund gives you easy access to your money with the convenience of marketability. Should you decide to sell your shares for a large-ticket item? You decide with the advice of your financial adviser, the level of risk you feel comfortable with. Depending on the time you designate for your investment, your financial adviser will recommend a combination of Equity funds, balanced funds and Income funds. Each fund comes with a certain level of risk.

In a Down Market, Keep Investing to Grow Shares

  • Equity funds are for aggressive investors who feel comfortable investing in high-volatility companies that pay the highest rates of returns in the shortest amount of time.
  • Balanced funds include bond funds and Income funds that are for highly conservative investors who cannot fathom a risky investment. They require security with no loss of their principal.

In a down market, your financial adviser will compel you to keep investing to benefit from dollar cost averaging allowing you to to gather shares. The more shares you own of a fund the more effective your account will be.

Though past performance is no guarantee of a fund’s future performance, it has been consistently proven that the stock market has outperformed its safe FDIC insured account counterparts.

With time on your side, there is no reason why you cannot reach your financial goals. If you consistently invest early in your working life on a regular basis, you'll win the money war. And watch your nest egg grow with diligent effort and careful analysis!

Money Poll

Do you save at least ten percent or more of your money every month?

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Money Tip: Spend Less Than You Earn, and Invest the Difference

© 2011 Sheila Craan


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