Investment strategies for the holidays

Is your holiday gift to yourself, peace of mind and more money?
It’s never too early or late to invest. But where do you go for the best service and highest rate of return? What investment options are best? Why now, during the holiday season? Smart personal investors get started during this season and they do it in groups to improve yield rates and encourage one another.

This the season to invest?
If you think this is the season to spend, think again. Some banks have seasonal needs to increase their deposits and you could benefit from higher interest yields. Additionally, the federal reserve’s quantitative easing strategy will most likely keep interest rates going down.

What is a safe investment?
Banks or Credit Unions are still the safest place to keep your money. However, they are the worst to offer a high rate of return, especially if you don’t get the right service. Ensuring you talk with the right person at your financial institution will yield better results. Make sure you talk to the branch manager or a person licensed to provide investment advice. Shop around for the best bank, but keep your entire deposit relationship with as few banks as possible. Shopping for financial institutions is something people should do more often. The truth is, consumers benefit from lower fees and higher yields if they keep larger deposits.

Which type of adviser is right for me?
The best way to decide where you place your money should always be based on the reason you invest and the purpose for future cash withdrawals. Personnel at financial institutions always change. If you have a good adviser, more than likely she or he will be promoted by the time you retire or need to move your money. Choosing the right investment partner should not only be based on convenience. While some like online banking others still like face to face interactions. Initially, most should visit their financial institution to carry out an investment plan and to get a higher interest yield exception.

What do I invest in?
Select your investment strategy based on a goal not a rate or term. Figure out your investment goals and the prioritize them. Most investment managers suggest you divide your goals by short-term and long-term. I would add that you categorize goals by possible, probable, and improbable. You know if you can stick to these goals based on your discipline and determination. Set yourself for success and find someone to encourage you. Most investment plans fail because of poor discipline.

Who do I trust?
Most banks, credit unions and brokerage companies offer pre-investment assessments. Some financial planners are fee only financial planners. This type of fee arraignment are for investors that have advanced and have frequent transactional needs. Be cautious of biased financial planners and always meet with more than one planner from different companies. You want someone who is not over burden with thousands of clients. Preferably someone who is easily accessible to answer questions once they have your money. Most financial planners give the same investment options, what differs is their knowledge, personality and time. Most people do not remember what they invested in, they remember how they are treated.

Savings, IRA, 401K, Annuities what’s the difference?
You need to ask your financial adviser to explain all these options. Depending on your wealth or wealth goal, you may have one or a combination of these investment options. Any account that has a purpose of saving for a large purchase within a 5 year period is not an investment, it’s a savings. A savings is typically withdrawn within a short period and at best keeps its principal value, or purchasing power. Investments are long-term and typically increase in value. The value of an investment is it’s equity and the benefit of the cash flow it provides. All these investment types can offer many choices in investment products. In some investments types, like annuities, the investments products are underwritten within a life insurance policy and provide insurance as an added benefit. This feature is not free so make sure you don’t already have it and you really need it.

What investment products do I choose?
There are a wide-set of financial products. These include, stocks, bonds, commodities, mutual funds, corporate paper, municipal bonds, treasury bonds, certificates of deposits (CD), structured CDs, money markets, and savings accounts to name a few. Your rate of return in variable rate investments will differ and in the short-term, (less than one year), you may lose value. The only way to avoid this is by selecting fixed rate services insured by a federally backed agency. If you’re concerned about having a large investment account without federally backed insurance, you may want to buy treasury bonds. These bonds are backed by the Federal Reserve, who backs the FDIC. However, most people wish they had this problem.

The secret to improving your yields
Most common fixed investments are bonds and CDs. Fixed CDs are typically bank products although financial advisers are willing to sell them as loss leaders to gain your business. CD’s typically have the lowest yield rates; don’t settle for the listed yield rates. Ask for a manager to make a rate exception. The larger the amount invested, the greater the chances of getting a higher exception rate. A good strategy is to visit your financial institution with family or friends that are also investing. Having the bank understand your household size does not means you need to pool your funds to invest. Let your financial institution know that you will cumulatively deposit and invest. You can keep your bank accounts separate and still leverage your common relationships. As a group, not only are your combined deposits larger, but you can encourage each other to continue the investment strategy.

This post and the contents in this site are not intended to be or is personal financial advice. Always speak with a licensed professional before investing.

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