I Can Tell How You Should Invest Before We Ever Talk About Money...

posted on 06-07-2019

As a financial planner, I can tell which investments are probably best for my clients before we even talk about money

How is that possible? It's pretty straight-forward, actually.

I don't mean to suggest that I know which investment strategy to take before they even come into my office. Rather, as we talk about their lives, I get a sense for their personality. And personality is an indicator of your investment strategy.

Everything that we do in life is an extension of our personality, from our vacation spot to our career. For example, when people are very conservative by nature, they probably don't want to take a lot of risk (if any) when it comes to their investments. Conservative people are conservative investors -- they like knowing what to expect and they don't like surprises. 

I have a client who is never open to change. He doesn't like to take risks on anything  -- especially his investments. He likes the security of knowing that everything is the same, and he never wants to hear about new products. I don't need to meet with him more than once a year because we don't need to make changes to or revise his investment portfolio -- he just needs to be reassured that his money is still there.

Meanwhile, if a person is very organized and in control of everything in her life, her investment portfolio is likely the same way. I have a client who is borderline obsessive compulsive about everything being scheduled. She comes to see me every third Wednesday of the month at 1 p.m. on the dot.

I know that she likes to be in control; she has to have calm in her life. So I let her take control of the conversation. I make investment suggestions, but ultimately she makes the decision. The truth is that the meeting is just a formality; she already knows what she wants before she comes into my office.

Then there's the client who always talks to me about her home -- it's her pride and joy. Every time she comes to see me she has a new recipe or decorating tip for my apartment. She also likes to share statistics on germs in homes and offices. My client keeps her home immaculate and she wants her investment portfolio the same way.

This client requires financial planning by the book. She doesn't want to have several different investments because it creates a multi-page statement and (in her mind) financial messiness. Her investment portfolio is well diversified among cash, fixed income investments and domestic equity. However, she does not have several types of investments in each asset class; there is just one -- maybe two mutual funds per category -- and that's the way she likes it. Clean and simple.

The Investing Answer: Personality is an indicator, but your financial planner needs more from you. Visit your financial advisor at least once a year to make sure that your investment options are in line with your current goals.

Also, prepare questions about your investment options to make sure that when you walk out of the office, you are comfortable and confident with your investment choices.  It's also a good idea to have all of your statements in hand so that you can compare and discuss the performance of your investment portfolio with your financial advisor.

by Christian Hudspeth What's even better than earning rewards for spending on your credit cards? Getting paid hundreds of dollars worth in sign-up bonuses in three months or sooner -- just for tr...
by Christian Hudspeth Tired of dragging credit card debt around with you? Taking 15 minutes to transfer your debt to a credit card with generous balance transfer perks could save you thousands in...
by Christian Hudspeth If you're going to spend money anyway, then why not get paid for it?Whether you're looking for credit cards with up to 6% cash back, double flight miles, or even a free hote...
by Christian HudspethIn times where interest rates are on the rise, you may start hearing financial advisors and bankers sing the praises of an income strategy called "CD laddering" (short for ce...
by Susan Campbell Those of us familiar with selling property know real estate agents don't come cheap. With real estate agent commission and fees amounting to as much as 6% of the sel...
Beverly Harzog is a nationally recognized credit card expert, author, and consumer advocate. She blogs about credit cards at BeverlyHarzog.com. Being in credit card debt is the pits. I've bee...
by Christian Hudspeth If you haven't already felt the pressure to refinance your mortgage, you're probably really feeling it now. Mortgage rates are still hovering near historic lows. But ...
by Christian Hudspeth If you or someone you know is thinking about getting a home mortgage, you may want to know about the thousands of dollars in hidden charges that some lenders are quietly...
by Christian Hudspeth Money market accounts (MMAs) and savings accounts make great places to set aside your emergency fund money and earn some interest income at the same time.Simply put, these s...
by Christian Hudspeth It's true that auto loans and home loans offer attractively-low annual percentage rates (APRs), while credit cards offer borrowing power without the risk of ever seeing the ...
by Christian HudspethWant to keep your emergency fund safe while earning interest yields that are three to five times higher than a typical savings account? Putting your money into an FDIC-insure...
by Christian Hudspeth Question: Hi there. I need your advice. I'm only 19 and I really need to start investing. Where can I start? -- Tirelo M., Gaborone, Botswana Answer: You've defini...