Many people who ask me about investments or about wanting to set up an appointment often preface it by saying, "I'm sorry, this is probably a stupid question, but…"
I started to wonder why people often say this and asked myself if I ever do. For me, it's usually when I'm talking to someone, such as a doctor or a lawyer, about a subject I don't know a lot about or that intimidates me. I think most people are afraid to ask questions about their investments for fear of sounding bad or admitting in some way that they don't have all of their "stuff together."
I can assure you, there truly are no stupid questions when it comes to investments. Every question leads to more knowledge, and that's a good thing.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
First, let's start with questions about the investment itself:
- Is this product registered with the SEC or my state agency?
- Does this investment match my investment goals? Why do you feel it is suitable for me?
- How does this investment make money? Dividends? Interest? Capital gains?
- What are the total fees to purchase it? Not just commissions but any underlying fees as well.
- Is this investment liquid? Are there any fees associated with accessing my money?
- Can you tell me about the management team? Many companies tout past performance, but that may have come from a team that isn't there anymore.
- What is a reasonable return to expect for this investment? How has it performed over the long run? Many managers who highlight performance do so after a great year. If you are a long-term investor, that might not be meaningful to you.
- What are the risks associated with this investment? What would cause it to lose money?
Next is a list of questions you should ask about the adviser:
- How long have you been in business?
- What education or credentialing do you have? The credentials should match the advice you're looking for. For example, if you need planning advice, the advisor should be a Certified Financial Planner TM professional. If you want investment advice, then they should hold designations such as Certified Investment Management Analyst® (CIMA®), or Chartered Financial Analyst (CFA®).
- What is your investment philosophy?
- How do you get paid? Do you get paid more if I buy this vs. that?
- How often should we meet to discuss my investments?
- If I leave your firm, what are the fees if any? Most custodians charge a fee for outgoing transfers and/or closed accounts.
These questions are not inclusive, and you may have more depending on your situation. It is also important to ask a question more than once if you don't understand the answer the first time or to ask your adviser to rephrase the answer in a different way.
Understanding your investments and doing your due diligence on the adviser you’re working with is similar to researching a physician and understanding your prescribed medications. You wouldn’t leave your health to chance, and the same type of care should be taken with your money.
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. Reich Asset Management, LLC is not affiliated with Kestra IS or Kestra AS. The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney or tax adviser with regard to your individual situation.
-
Stock Market Today: Stocks Stable as Inflation, Tariff Fears EbbConstructive trade war talks and improving consumer expectations are a healthy combination for financial markets.
-
What Trump’s 'Big Beautiful Bill' Means for Your Utility BillsIf passed, the 'Big Beautiful Bill' could make home energy upgrades more expensive and raise monthly costs. Here's how much more you might pay and how to prepare.
-
Eight Estate Planning Steps to Protect Your Loved Ones (and Your Legacy)Two-thirds of Americans don't have an estate plan. If you're one of them, these are the essential steps to take now to prevent problems for your family later.
-
The Six Pros This Adviser Says You Need to Sell Your BusinessSelling your business isn't as simple as getting the best price and walking away. These are the six professionals you'll need to get a deal across the finish line.
-
The Three C's to Financial Success: A Financial Planner's Guide to Build WealthConsistency, commitment and confidence in your chosen strategy are more critical to your financial success than finding the 'perfect' financial plan.
-
A Financial Adviser's Guide to Solving Your Retirement Puzzle: Five Key PiecesIf retirement's a puzzle you're struggling with, try answering these five questions. The answers will guide you toward a solution.
-
You're Close to Retirement and Cashed Out: How Do You Get Back In?If you've been scared into an all-cash position, it's wise to consider reinvesting your money in the markets. Here's how a financial planner recommends you can get back in the saddle.
-
After the Disaster: An Expert's Guide to Deciding Whether to Rebuild or RelocateHomeowners hit by disaster must weigh the emotional desire to rebuild against the financial realities of insurance coverage, unexpected costs and future risk.
-
A Financial Expert's Tips for Lending Money to Family and FriendsWhat starts as a lifeline can turn into a minefield if the borrower ghosts the lender. Following these three steps can help you avoid family feuds over funds.
-
What the HECM? Combine It With a QLAC and See What HappensCombining a reverse mortgage known as a HECM with a QLAC (qualifying longevity annuity contract) can provide longevity protection, tax savings and liquidity for unplanned expenses.
