Topic of money or anything related to it is very complicated. It is also sensitive. Different people have different opinions and attributes towards the topic. Use of financial instruments is a personal choice. One needs to be cautious of the risks involved.
If you are looking forward to use financial instruments, here are certain crucial things you should know before making a choice:
Most people ignore the charges involved. An informed consumer must be aware of the charges involved. You should also know then a number of years, months or days your investment will take to break-even with added charges.
Why do you want to get a financial instrument? Before availing of a financial instrument, it is crucial that you know your objective. Whether it is an insurance policy or a savings plan, no financial instrument should be taken without understanding the whole purpose of having it. Many people get an insurance policy just because someone has suggested them to do so. Since the insurance policy is bought without a purpose, they lapse it. Similarly, investing in a savings plan without a goal is a waste of time and money. You may either liquidate it or forget about it. The money deposited into the bank will soon be spent as you don’t feel the need to save! In short a financial instrument should have a goal attached to it.
Who is your advisor? Do you know him? What is his qualification? How long has he been in the business/job? Does he hold a clean past record? Make sure you ask your advisor if he practices what he preached. For instance, if he recommends a specific plan or financial instrument to you, ask him if he would consider it for himself. You may get references from your friends and colleagues to reach out to the best advisor or financial instruments providers. Look for reviews and testimonials online prior to making a decision.
Understand the Financial Instrument
How well do you know the financial plan you wish to invest in? What are the pros and cons of having one? It is important to get a financial instrument after knowing about it really well. After all, you would not want to face unnecessary burden and troubles later on in your life. So make sure you clear your doubts and get queries solved prior to making an investment.
Getting something you cannot afford isn’t a smart decision. So whether it is a life insurance policy, a savings plan or investment plan, make sure you can afford it well. Let your financial consultant recommend some strategies after analyzing your present financial situation. You may utilize these strategies to accommodate the most beneficial financial instrument for future use.
It is crucial to check if the plan you choose has any upfront charges. Consult an experienced advisor if any kind of backend charges is applicable to your policy. After all, disappointments when the liquidating financial instrument is no fun! Hence, it is important that you check in advance.