It is no longer sufficient to be a “saver.” Saving money in a bank account is a critical first step to any long-term family financial plan. But after saving sufficient funds for dealing with expenses, both ordinary and unexpected, a long-term financial plan must reach beyond a savings account. Many Americans — now more than ever — have a relationship with a brokerage firm, to buy and sell stocks and other financial securities. Here are some things you should keep in mind.
1. Investigate before you invest.
Almost all brokerage firms and individual brokers are registered with the Financial Industry Regulatory Authority. FINRA is a “self-regulatory organization” under federal securities laws. FINRA operates “Broker Check,” which investors can access at https://brokercheck.finra.org/ (opens in new tab). This allows you to review the regulatory compliance history of the firm, and the individuals, you are dealing with.
2. Read your paperwork every month.
Take the time to review any changes to your account every month. If you’ve chosen electronic document delivery, log on at least once a month. This has a number of benefits. It compels you to stay abreast of your holdings, and it will alert you to any transaction you do not recognize. Such events are rare but can be very consequential. If you do find a transaction you do not understand, by all means call the brokerage. But … and this is important … if there is an error in your account, make sure to write to your brokerage firm about the error. Should there be any question about the validity of any transaction, you want to be able to say that the transaction was recognized quickly and documented as soon as possible.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of Kiplinger’s expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of Kiplinger’s expert advice - straight to your e-mail.
3. Understand your investments.
If you don’t understand an investment, then you shouldn’t be involved in it. Here is an actual investment pitch: “Objectives are achieved through a top-down, bottom-up process that identifies disparities in the economy or securities sectors, creating +/- changes in market perception.” Huh?
4. Understand that no investment is guaranteed.
Unlike bank deposits, investing involves risk. No one can assure you that any one of your investments is foolproof. Indeed, if you are told by any party, be it a brokerage firm, or any other person soliciting your money, that the investment is guaranteed, beware.
5. Make sure your securities are held by an SIPC member brokerage firm.
Brokerage firm failures are rare. However, if for any reason your securities broker cannot return your securities to you, you have certain protections available to you from the Securities Investor Protection Corp. To learn more about SIPC, how you are protected, and the limits of that protection, visit the SIPC website at www.sipc.org (opens in new tab). You can check on the website to assure that your brokerage firm is, in fact, a member of SIPC.
-
-
State "Stimulus Checks" Are a Thing in 2022 – Will You Get One?
To help counter high inflation, pandemic woes and other financial hardships, some states are sending tax rebate "stimulus" checks or other payments to residents.
-
How Young People Can Own Their Financial Future Authentically
It starts with trusting the process. The good news is Gen Zers and younger Millennials are on their way, a new study says.
-
How Young People Can Own Their Financial Future Authentically
It starts with trusting the process. The good news is Gen Zers and younger Millennials are on their way, a new study says.
-
No Grinch Allowed! Inflation-Beating Tips for the Holidays
To make the most of your holiday season in these inflationary times, start planning NOW.
-
3 Top Challenges Female Entrepreneurs Face When Starting a Small Business
Inherent biases make it harder for women to get funding than men, and many women start later in life and juggle family commitments.
-
ADA Violation or Just Bad Business? Honey, I Shrunk the Menu!
When a chain restaurant introduced a new menu with teeny-tiny print, customers were not happy. But was it illegal?
-
Retirement Planning: One Size Doesn’t Fit All
For the most important financial decision of your life, you need a plan that’s tailored especially for you, rather than simply following rules of thumb.
-
The Divorce Gap: Unique Retirement Issues for Women Over 50
The shocking loss of income and retirement savings that disproportionately affect divorced women is a big challenge – especially for those over 50.
-
4 Steps for Managing Income Withdrawals in Retirement
Investing for Income How Roth IRA conversions can help you minimize your taxes in retirement, extending the life of your savings.
-
Tax-Savvy Charitable Giving With QCDs Can Benefit Both Giver and Receiver
Charity A qualified charitable distribution, or QCD, might be the answer for you – but watch those rules.
