5 financial questions to ask your advisor
(NC) Are you financially prepared to retire? Every year more and more Canadians are closer to these golden years, so to make sure we are on our way to reaching our financial goals, here are five essential questions to ask your investment advisor before it's too late:
Is my vision of retirement realistic? Communicate your future lifestyle plans to the advisor. Do you want to travel, open a new business, or work part-time? Defining how you see your future will help you and your financial planner build a better framework.
Is my plan working? Ask what the overall performance of your portfolio was last year; do the same for the last three-year period, and for the last five years. Ask how much risk is being taken in order to achieve that level of return. If it's not a good risk-adjusted return, make adjustments.
Do I have all my eggs in one basket? If there is one lesson learned following the 2008 financial market crash, it is the importance of diversification. If you only own a few types of investments or are relying on your home or business to appreciate in value, ask your advisor about Exchange Traded Funds (ETFs). This fund is similar to mutual funds, in that they are essentially funds that hold a collection of investments (such as stocks and bonds), but trade like a stock on the exchange.
Are ETFs right for me? With a single cost-effective purchase, you can gain access to entire markets or strategies, providing you a diversified portfolio that's better protected against market shakedowns. Not all ETFs are created equal so it's a good idea to research companies such as First Asset Exchange Traded Funds (www.firstasset.com), which specialize in trying to deliver superior risk-adjusted returns for investors, before meeting with your advisor.
Am I saving enough? You may find the results unpleasant and surprising, but you need to discuss your spending habits with your advisor and adjust your lifestyle accordingly. It doesn't matter how much money you have, if you spend more than you make, which a lot of people do, you're in trouble.
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