STARKVILLE, Miss. (WCBI) – Timing the market, picking the right time to get in and get out, is rarely intuitive. Typically, the best time to jump in is when the economy looks terrible and other investors are bailing out.
Meanwhile, the worst time to pile on, traditionally, is when things are looking good.
Rather than trying to time the market, hedge your bets. Don’t take a giant plunge into the market one day. Instead, ease in over time. But before you do that there are some things to look for when starting your financial planning.
First and foremost you should always understand your investment vehicle. Not all financial instruments are created equally or work for your personal financial goals. Some provide steady income and are low risk, but yield small returns on investment; others may provide significant returns, but require a long term investment commitment.
Next define you goal. Ask yourself “Why am I investing money?” Maybe you want to save money to purchase a house or to save for retirement. Maybe you would like to have money to pay for your child’s education, or just to have a financial cushion to handle unexpected expenses or a loss of income.
Always know the risk involved. With any investment, there is always the risk that you won’t get your money back or the earnings promised. There is usually a trade-off between risk and reward: the higher the potential return, the greater the risk.
And look for someone who has a feduciary duty. That is someone whose duty is to act in your best interest when investing your money.
According to Dr. Michael Highfield at Mississippi State University, “What they want to look for is make sure they get full fee disclosure. It’s very easy in this industry for them to hide fees from individuals. So if they are getting a statement and being told they were going to be charged one thing and then they are charged something else, so make sure full fee disclosure and if they have a problem with that then walk away from that investment advisor. Make sure your assets are held with a separate custodian. So if I invest assets with somebody, they’re not the only one that touches those assets maybe they’re held with Fidelity or Schwab another company. So they’re introduced to a third party to keep accountability on all those involved.”
Ask plenty of questions and know what you’re getting into before you give up any of your hard earned money.