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.
-
Four Ways to Prepare for a Retirement Full of TravelWho wouldn't want to explore the world? But first think about what you hope to get out of your travels — and take a good look at your finances.
-
How to Hedge Against TariffsDonald Trump is expected to raise tariffs on imports in the coming months which could have a big impact on public companies. Here's how investors can prepare.
-
Four Ways to Prepare for a Retirement Full of Travel
Who wouldn't want to explore the world? But first think about what you hope to get out of your travels — and take a good look at your finances.
-
Five Tips to Help Avoid a Denial on Your Insurance ClaimAfter a loss, take some deep breaths and follow the rules to ensure your insurance company is able to do its job on your claim.
-
Key 2025 IRS Updates: What You Need to KnowFrom IRA contributions to Social Security COLAs and the standard deduction, several changes are headed our way. Get ready to make the most of them.
-
While Winding Down From the Holidays, Many Wind Up for DivorceJanuary is known as Divorce Month for a reason. Here's how women in particular can protect their financial future, especially when going through a gray divorce.
-
11 Questions to Ask When Choosing a Fiduciary AdviserHow a potential financial adviser responds to these questions can help you decide whether they're the right choice for you and your financial future.
-
What's the Key to a Happy Retirement for a Couple?Retired couples spend lots of time together. Without the distractions of work and raising kids, miscommunication can cause trouble. Here's a way to avoid that.
-
Investing for Charitable Giving: Discipline Reaps RewardsConsider doing nothing when markets get volatile, rather than shifting your charitable investing strategy in the moment.
-
Feel Free to Disagree, But Here's How to Bridge DifferencesRather than remaining at odds with those who disagree with you or simply shutting them down, here's how to lower the temperature.
