Working with a financial advisor is an excellent way to plan for the future and ensure that you’re saving what you need for retirement. It’s important to make sure that your financial advisor is the right one for you and that they’re a fiduciary, which means that they’re obligated to only take actions that are the best for their clients. Once you’ve found the right advisor, however, they can not only help you maximize your finances but also help you to become more financially literate yourself.
These are some questions you should ask your financial advisor to maximize your investments and to increase your own financial literacy.
How Can I Financially Prepare For An Emergency?
There are many Americans who aren’t financially prepared for an emergency. Some of these people may not have had emergency savings because they couldn’t afford it. However, many may not have realized the importance of having a rainy day fund. Speak with your financial advisor to find out how much you should have set aside for an emergency. That way you can be confident that your finances can absorb an emergency, such as a global pandemic like that of COVID-19.
How Can I Reduce My Taxes?
No one likes paying more taxes than they have to. Another question you can ask your financial advisor is how you can minimize the amount of taxes you’re paying and increase the amount you get back on your tax return. There are deductions, credits, and exemptions that you may qualify for that you can claim on your tax return. Depending on your financial advisor, they might not be an expert in taxes and therefore may need to refer you to a tax professional who would be able to answer those questions in more detail for you.
How Can I Meet My Retirement Goals?
You’re never too young to start thinking about retirement. The sooner you start putting money into a retirement account, the more that money can grow and the sooner you’ll be able to retire. You should talk to your financial advisor about your retirement goals. They can help determine whether your current contributions to retirement are in line with when you want to retire and with how much. They can let you know if you need to adjust how much you’re contributing or if you should change how you’re investing those contributions.
What Should Be My Financial Focus?
Having a financial plan is a great idea because it can help you to pay off debt and save money to achieve life goals. If you have multiple financial goals but aren’t sure which is the best one to focus on, ask your financial advisor about it. They can let you know whether it’s better to put extra money towards retirement or towards paying down student loans, for example. A financial advisor can also advise you on which investment opportunities are ones you should focus on. A 401(k) isn’t the only method for investing or saving for retirement.