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The one thing to keep in mind before investing your money – Ladders

This post was originally published on this site

Investing money is one of the easiest ways to both save money and grow wealth. Rather than keeping your money stashed away in a savings account, you could invest it and watch it potentially grow. Sounds like a no-brainer, right?

But wait — before you start Googling investment apps and transferring money into a new account, there’s something you need to keep in mind. Not all investment firms have the client’s best interest in mind. We know, why wouldn’t a big bank want to help its clients invest money and grow their wealth? Unfortunately, sometimes financial advisors or stockbrokers have other items on their agendas (like their own personal compensation desires).

So the main thing you need to keep in mind before investing your money is whether or not the investment firm you’re wanting to work with is a fiduciary.

What is a fiduciary?

Fiduci-what? A fiduciary (pronounced fid-u-shi-ary) is a person, like an accountant or a financial advisor, who acts on behalf of another person to make decisions for them. They are ethically bound to act in the best interests of the other person.

You may think the accountant or financial advisor you use is a fiduciary, but you may be wrong. And you’re not alone. According to a 2017 study conducted by Personal Capital, 46 percent of Americans responded that they believe financial advisors are required by law to act in the best interests of their clients. However, they are not. In 2017, the U.S. Department of Labor began rolling out what they call the “fiduciary rule,” which would have required financial advisors to keep their clients’ best interests in mind at all times. Unfortunately, by June 2018, the rule was officially considered dead and no such law was put into place.

So what does that mean for you, the client? It’s time to ask a lot more questions before handing your money over. This includes your retirement, tax, investment and any other accounts you may have. Not sure what to ask your current or future financial advisor? Here’s our list to get you started.

Are you a fiduciary?

How do you charge for your services?

How much do you charge?

What types of clients do you specialize in?

Do you have a sample financial plan I could look at?

Will you solely be managing my money, or will your team be involved, as well?

What’s your investment strategy?

How much communication will there be between us?

Why should I work with you and your firm?

With these answers stuffed into your back pocket, you’ll have a much clearer understanding of who is working with your money and in what ways. And that knowledge means power (not to mention much higher chances of growing your personal wealth). Happy investing!

This article was originally posted on Swirled.com in the Thrive section, which covers valuable career and personal finance content for millennials.

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