There are so many investment services to choose from that the selection can seem overwhelming. Unfortunately, many people become so overwhelmed when choosing an investment service that they just pick the one that appeals to them based on advertisements or brochures. While you may get lucky doing it this way, you should really invest a little more time when choosing who you allow to handle your money.
The first step when choosing among the many investment services available is to understand why you are saving money. Even many people with the same goal will approach saving in different ways. If you are planning to retire in ten years your investment strategy should be very different than someone who plans to retire in thirty years. It is important that the investment services company that you choose treats each client as an individual and doesn't put everyone in the same savings vehicle.
Ask your peers, as well as people that are older than you, or perhaps even retired, which investment firm they use. Most people, particularly if they are happy with the service they have received, are willing to talk about what company they use to manage their savings and investments. While you don’t need to know the specifics of their financial situation, there are many questions that they can answer.
Ask what the average rate of return is, as well as what type of fees they are required to pay. Communication is important as well. An investment services firm that doesn’t return phone calls can make the investor nervous.
There are two basic types of investment services firms. The first is a no-fee firm. They do not charge you an upfront or annual fee, but they charge you a percentage with every transaction. The second is a fee-based planner. These firms charge you a specific amount to manage your money.
For most people, the fee based planner makes the most sense. While the idea of only being charged a fee when you move your money around is appealing, it is important to realize that the investment firm may move your money around quite a bit. With a fee-based planner, you know exactly what you will be charged.
Once you have selected the investment services company you believe will best meet your needs, your job is not over. To keep up to date on your financial situation it is important to read your statements on a regular basis. When the market is volatile it can be tempting to let those statements pile up. You should read the statements in good times and in bad, so that you are familiar with the product that you own and know how your investments are progressing.