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When it comes to making financial decisions and managing your money, who do you ask for tips or advice? We think it’s always a good idea to consult with experts, and that’s how we pulled together these bits of financial wisdom. Here are 40 money management tips from experts that you can apply to your own trading, investing, saving, and financial planning:

1. “For each investment you make, you really, really have to understand the risks that you're taking. Don't outsource that task to your financial advisor…. If you're not willing to do that work, you should just keep your money safely in a bank.”

Greg Collett

Formerly COO of Deutsche Bank's commodity ETF business, currently a lawyer representing defrauded investors.

1. “You must walk to the beat of a different drummer. The same beat that the wealthy hear. If the beat sounds normal, evacuate the dance floor immediately! The goal is to not be normal, because as my radio listeners know, normal is broke.”

Dave Ramsey

Host of the "Dave Ramsey Show" and author of "The Total Money Makeover"

1. “Cut your losses short.The ‘it'll come back’ mentality is dangerous. One great way to do this is through the use of stop loss orders. Don't fear them. Use them. They are your best friend.”

Blain Reinkensmeyer

Principal at Reink Media Group, hobby investor, and full-time webpreneur. He is responsible for all equity broker reviews and business development on StockBrokers.com

1. “Be patient and wait for the high probability/low risk trades. They are out there. Be like a predator/lion waiting in the brush and then pounce. You'll eat for a week.”

Dan Sugar

Instructor at Online Trading Academy

1. “I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.”

Warren Buffett

American business magnate, investor, and philanthropist. Widely considered the most successful investor of the 20^th century

1. “A common mistake people are making in retirement planning is failing to diversify their investment strategy from a concentrated stock position.There is no reason why you can't diversify your risk when it comes to the stock market.”

Clark Kendall

CFA, CFP®, AEP, President and Founder of Kendall Capital Management

1. “No one ever achieved financial security by being weak and scared. Confidence is contagious; it will bring more into your life.”

Suze Orman

American author, financial advisor, motivational speaker, and television host

1. “Check your credit report for errors!One simple mistake can cost you money. If you are not looking at your credit report to protect it against errors, who is? 15 minutes, twice a year is easy for anyone.”

Jeanne Kelly

Credit Coach.

1. “Wall St. is playing games with your money.Many investors do not know it is a game or know the rules! The first rule of trading is to know you are in a game.”

John O'Donnell

Chief Knowledge Officer, Online Trading Academy

1. “Frugality isn’t about cutting your spending on everything.That approach wouldn't last two days. Frugality, quite simply, is about choosing the things you love enough to spend extravagantly on—and then cutting costs mercilessly on the things you don't love.”

Ramit Sethi

Author of I Will Teach You To Be Rich

1. “Comparison shop when it comes to choosing a primary financial institution. It's a very basic concept, but one that many people fail to grasp. The big banks are often the default choice, yet smaller and institutions like community banks and credit unions are considerably overlooked.”

John Gower

Analyst for NerdWallet, a personal finance website

1. “An investment in knowledge pays the best interest.”

Benjamin Franklin

One of the Founding Fathers of the United States. Author, politician, scientist

1. “Professionals look at a trade and ask ‘what is my risk?’ first. Novices ask ‘what can I make on this trade?’ first and don't understand the risks.”

Chris Muldoon

Instructor at Online Trading Academy

1. “You don't have to start big...small steps over a lifetime really add up. Start funding your emergency fund with $10 a month, start investing with $50 a month. It is more important to get going than to wait for the big amounts of cash!”

Andrea Travillian

Personal finance expert specializing in money management basics and beginner investing.

1. “In investing, what is comfortable is rarely profitable.”

Robert Arnott

American entrepreneur, investor, editor and writer

1. “Individual traders must manage their trading just like a business. In other words - keep expenses low, focus on improving profit margins, develop several streams of income, and build large cash reserves.”

Charles Kirk

Full-time, independent trader, creator of The Kirk Report

1. “Warren Buffet said: ‘When you combine ignorance and leverage, you get some pretty interesting results.’ We have seen this statement become fact in the last 7 years. However, leverage used correctly when investing in real estate can create long term wealth and great ROI.”

Diana Hill

Instructor at Online Trading Academy - OTA Real Estate

1. “Live under your means. Know exactly what you earn each month and spend less. That's a step beyond living within your means. Take responsibility and choose where your money goes, instead of being influenced by whims, advertising, habits or peer pressure.”

Kevin Gallegos

National consumer finance expert, vice president of Freedom Financial Network

1. “The individual investor should act consistently as an investor and not as a speculator.”

Ben Graham

Economist and professional investor. Graham is considered the first proponent of value investing

1. “One of the biggest mistakes I see people making is investing based on emotion rather than a disciplined, systematic process. In particular, I think people need a disciplined plan for risk management as mitigating large draw-downs in your investment portfolio has the potential to add more value over time than maximizing every ounce of upside in the bull markets.”

David Houle

Co-Founder and Portfolio Manager at Season Investments

1. “Know you want it, then wait for wholesale!”

Joann Farley

Instructor at Online Trading Academy

1. “My top tip for traders is to look at each of their trading positions each day as if they didn't have it and ask themselves if they would open it. If the answer is "no", then the position is no longer justified, and therefore should be closed. This simple mechanism allows traders to trick their biggest enemy (emotionality in trading) and stay objective.”

Przemyslaw Radomski

Chartered financial analyst and owner/editor-in-chief of Sunshine Profits, website dedicated to gold and silver investments

1. “Everyone has the brainpower to follow the stock market. If you made it through fifth-grade math, you can do it.”

Peter Lynch

American businessman and stock investor, research consultant at Fidelity Investments

1. “The most impactful approach to money management is spending less than you owe… By establishing a structured spending plan, which accounts for all expenses, you can focus on eliminating unnecessary expenses and commit your disposable income to building wealth.”

Thom Fox

Community Outreach Director at Cambridge Credit Counseling Corp

1. “Saving at least $1,000 in emergency savings should be a non-negotiable part of your overall money management plan. This holds true regardless of any existing debt you're trying to pay down. Why? Because should an unforeseen financial crisis hit your front door, without a savings safety net, you’ll only fall deeper into debt; preparedness means everything when it comes to financial success.”

Jennifer Calonia

Editor for GoBankingRates.com, an online personal finance resource

1. “Invest in yourself. Your career is the engine of your wealth.”

Paul Clitheroe

Australian television presenter, financial analyst and financial advisor

1. “Wealth building is simple and can be fully explained in just one sentence: Spend less than you earn and invest the difference wisely. If you get that right you will be wealthy. Everything else is just details.”

Todd Tresidder

Money Coach at FinancialMentor.com

1. “People should take every opportunity they can to save money because it really adds up, and the best way I know to do that is to make your savings automatic.”

David Bach

American financial author, TV personality, founder of FinishRich.com

1. “Never enter into a trade or investment without having a thorough plan first. If you fail to plan, you plan to fail! That is the best money tip I can give you.”

Merlin Rothfeld

Instructor and Host of Power Trading Radio, Online Trading Academy

1. “Run your household like a business and manage your finances like a bank! The lack of money is not our problem it's the mismanagement of life holding us back from maximizing our earning potential.”

Mark A. Wingo

Author of Wingonomics, Creator of Get Your PhD in Wingonomics and President and CEO of New Beginning Financial Group, LLC

1. “Success is not in the quality of the winning trade but in the quality of the losing trade.”

Mike Mc Mahon

Instructor at Online Trading Academy

1. “To have a successful and secure financial future, it is important to adopt the mindset of saving before spending. If you set aside funds for the future each pay cycle, you are sure to have plenty of money in your retirement account and any other long-terms savings account.”

Gyutae Park

Co-owner of Money Crashers Personal Finance

1. “When buying shares, ask yourself, would you buy the whole company?”

Rene Rivkin

Australian entrepreneur, investor, investment adviser, and stockbroker

1. “Set aside an hour twice a month to update your budget and make sure your accounts are balancing. It's much easier to keep spending under control if you stay on top of things and catch yourself before you are too far over budget.”

Kathryn Garrison

CFP® and senior financial advisor from Moss Adams Wealth Advisors

1. “It's not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.”

Robert Kiyosaki

1. “Trade what you see…not what you think.”

Steve Moses

Instructor at Online Trading Academy

1. “Keep it simple, understand what you own and why.”

Gary M. Shor

MBA, CFP®, VP Financial and Estate Planning, AEPG® Wealth Strategies

1. “The four most dangerous words in investing are: ‘this time it's different.’”

American-born British stock investor, businessman and philanthropist

Sir John Templeton

1. “Set it and forget it. Manage big planning items (retirement, saving for college, vacation planning, etc.) easily by making them automatic.”

Carla Blair-Gamblian

Loan Consultant and credit expert at Veterans United Home Loans

1. “How you spend your money is how you vote on what exists in the world.”

Vicki Robin

Co-author of Your Money or Your Life and Yourmoneyoryourlife.info

As each New Year begins, we see a deluge of effective recommendations on how to improve financial planning.

If there is anything worth mentioning in the past two decades that we have been dispensing retirement planning advice to numerous people, it is the fact that those who take a proactive stance have achieved positive results while those who failed to protect themselves with sufficient safeguards encountered disastrous results.

With 2017 here, we focus on a few recommendations we consider essential in coming up with an efficient retirement planning strategy.

Essential Planning Tip #1: A Retirement Plan

Seek the help of a professional financial adviser to create a retirement plan for you.

A retirement plan is essential in charting your course on the right path for a secure retirement future, to avoid scams and put your hard earned money into waste. If you are not a professional financial practitioner, do not do it yourself in order to avoid committing errors or overlooking crucial aspects.

A retirement strategy must incorporate your income sources: Social Security, CSRS or FERS annuity, FERS retirement supplement and others (rental income, military pension, etc.).

You must never take this advice for granted. Do whatever you can to rev up your potential to earn. If you work as a federal employee, determine what you need to do to avail all the benefits to which you are entitled and discuss with a financial expert who can help you maximize your benefits. Having a highly knowledgeable financial adviser, however, may not be sufficient; because a few have given bad advice to federal employees who made wrong decisions that could not be corrected.

One vital step to take involves evaluating your specific income sources and analyzing how each one affects the others, determining how all of them can be made to work in synergy.

Take this case, for instance: In general, retirement planning advisers recommend putting off availing of Social Security benefits until one reaches the full retirement age (FRA) in order to gain a higher pension amount. For those born from 1943 to 1954, the stipulated FRA is 66 and it gradually goes up to 67 for those born in 1960 or after. For those opting to retire earlier, benefits are provided for those individuals who reach 62 and 1 month at a fixed reduced amount which is 75% of the full amount of expected benefit. It is crucial for those wishing to retire early to consider it if they are better off postponing Social Security benefits for a few years and getting bigger withdrawals from their TSP and other savings. This can often be a viable choice; but does not guarantee a positive result at all times. Find out if the withdrawals from your savings will eventually eat up your savings in just a short time; in which case, you might need to avail of your Social Security benefit earlier to secure your savings. This is why you have to assess all aspects of your plan.

Compute accurately what your expected net monthly income goal will be. This involves determining your actual expenses, like your taxes, insurance, utilities, car payments, etc.

At this stage, ponder what you plan to do when you reach retirement age: visiting places, learning to play music, dining, sailing, cooking, gardening, playing golf and others. Make sure you attach a figure to each activity so you will know what your expenses will be.

A good retirement plan will tell you if you are on track to support your targeted goals. You can adjust your savings target accordingly, especially if you have to contribute more to TSP or other savings plan to reach that target.

Cost of Living Allowance (COLA) must be part of a retirement plan to maintain your buying capacity in the future. As a married individual, you will also have to consider the survivor needs of your spouse which is a vital aspect of the plan. In case of the death of one of the spouses, the survivor might lose not just a part of the of the Social Security benefits received but basically half of the deceased spouse’s pension or federal retirement annuity, as it may apply.

An effective retirement plan has several components; and when everything is in place, you will easily recognize lapses or realize when you must adjust your plan along the way. A yearly evaluation of your plan is recommended in order to assess your progress and to make necessary changes according to your goals and needs.

The biggest mistake most people make, especially the young, is to procrastinate planning for one’s retirement. They feel that working with a financial advisor requires a big investment which they cannot afford and that doing it early enough is a waste of opportunity.

Initially, a lot of financial advisors offer a no-obligation consultation to find out what your financial situation and needs are. After that, they can quote a price for making a retirement plan for you. In fact, many people talk to several financial advisors before deciding who to work with in the end.

Planning for the future has no fixed-age requirement before you must do it. We can say that the earliest bird catches the biggest worm. With people having different needs, knowing you are on target as to your own goals can provide lasting peace and satisfaction.

Essential Planning Tip #2: Prepare a long-term healthcare plan

Provide for your and your family’s healthcare needs, especially for long-term medical care.

Even if you have a sound plan for your retirement years with a secure retirement income target in place may not be sufficient. Considering enhanced healthcare nowadays and the improved life expectancy among Americans, it is also a vital need to prepare for a more comfortable senior-year life through having a long-term healthcare plan.

LTC or Long-term care is a valuable protection for those who need care due to such conditions as physical injury, chronic illness, frailty or cognitive impairment. In general, the care provided is custodial care, not rehabilitative or intensive care. Based on the Department of Health and Human Services studies, 7 out of 10 people who reach 65 will require some kind of LTC. Depending on certain conditions, the care will vary in terms of cost based on the kind and length of care required, the care provider and the location of residence.

How do you pay for a long-term care need?

First is by the traditional LTC policy which is available through the Federal Government’s tie-up with John Hancock. An individual chooses the amount of daily benefit needed, the benefit duration and the inflation coverage. Perhaps, this is the least expensive way to acquire a LTC plan; nevertheless, the two main disadvantages pointed out are: (1) No guarantee on the premium given and rates have increased a few times. The most recent rate increase was in 2016 at 83% on the average, although beneficiaries’ premiums doubled. (2) In case you will not require a LTC, the insurer will not return all your premiums.

The Hybrid Life/LTC policy offers an option that has been attracting many individuals. In essence, the policy is a Universal Life insurance coverage which provides a chronic-care clause. Many of the providers channel 2% of the death benefit toward long-term care needs. For instance, if your plan stipulates a death benefit of $500,000 and you need LTC, you will receive a benefit of $10,000 monthly for LTC. In case you will not need LTC, your beneficiaries will receive $500,000 upon your death.

For those who have neglected the task of preparing sufficiently, self-insuring is the only choice. The rich, on the other hand, can opt for self-insurance without affecting their finances. Read this Forbes article: Can You Self-Insure for Long-Term Care?

An alternative plan is to buy into a Continuing Care Retirement Community (CCRCs) which provide different services in the locality as well as enhanced quality of care according to the changing needs. Nevertheless, CCRC’s charge high entrance fees and monthly charges, ranging from $100,000 to $1 million entrance fees and from $3,000 to $5,000 monthly changes which may increase with time.

You final choice is to avail of Medicaid. To qualify, you should have limited income and resources which may require spending down majority of your assets. Likewise, Medicaid might not satisfy some costs of your long‐term care needs; hence, preventing you from getting the quality of life you aim for.

Long-Term Care Requirements will Impact Family Relationships

Planning for long-term care will not only affect a family’s financial resources but also cause emotional and physical stress for family members who must assist overworked caregivers. With children in the picture as well, an individual may have to set his or her life on hold. Hence, not only is the caregiver affected but also the spouse and the children. When care is not equally shared among members, conflicts and squabbles may arise, sometimes even leading to estrangement. In short, LTC may have the potential to shatter families.

Essential Planning Tip #3: Avoid Splurging Your Money in Retirement

Many get into the trap of splurging away their money once they retire.

Having a sound budget in retirement helps prevent a person to commit the worst mistake ever – spending too much money too soon.

Overspending is a kiss of death for retirees. Prepare a list all of your monthly, quarterly or annual needs and divide into two classes: (1) Needs – such as food, rental or mortgage, transportation and healthcare. Account for any increase in healthcare cost. (2) Wants – such as hobbies, travel, sports and social affiliations.

For those who have been used to exorbitant payments for car and house obligations, changing your lifestyle may be only the solution. The key is to accept the realities of retirement life and then resolve to reduce your fixed expenses to free more funds for the things you truly enjoy.

Avoid the temptation to unnecessarily support the needs and wants of grown-up children and grandchildren. This happens so often to so many people in retirement.

Take the case of a lady who had taken a pension buyout from a private company. With her sizeable IRA, she felt she could adequately provide for her children. Thus, she overspent on her daughter’s wedding and kept saving her son from his financial straits. In short, before realizing it, she had spent too much too soon. Although we all feel we need to go out on a limb to help out our children, we should do so without endangering our own essential needs. Rarely, if ever, are there second chances in retirement.

With the year 2017’s entry, we find ourselves pondering upon what we attained in 2016 and, more importantly, what we need to do in 2017 in preparation for the years ahead of us. Breaking it down into its simplest ideas, our efforts must be toward achieving three essential things: Becoming healthier, wiser and wealthier. The steps needed to build our wealth are as follows:

Separate insurance from investment

Majority of people often put off planning their tax and investment requirements until the last few weeks of the financial year. And usually, they try to simplify their difficult problems by getting insurance. They may end up saving on their taxes; however, they can benefit more from wiser investing. Besides, the common endowment insurance policy provides minimal income and will provide the highest potential for creating enduring wealth. Moreover, the death benefits you get from insurance are not sufficient to address long-term financial needs of your dependents. The better solution is to separate your investment needs from your insurance.

Engage in monthly Investing

You need not equate Investing with getting insurance. Financial experts generally believe that the most effective way to create long-term wealth is through investing in equity, mutual funds, gold, real estate and small savings accounts, such as PPF and Sukanya Samriddhi Scheme. It does not matter how big or small the amount involved or what the investing objective, engage in monthly investing. If you have a couple of thousand rupees or more to invest monthly, do it as early as you can. For instance, invest Rs 4,500 in a mutual fund Systematic Investment Plan which will grow 10% yearly for 30 years, and develop a corpus of Rs 1.02 crore. However, with only five years left in your life to achieve the same goal, your monthly investment would be Rs 7,500 – or Rs 13,500 with 10 years left. This is all due to the effect of compounding interest rate.

Get term insurance and also ensure dependents

For those with dependent family members, consider getting life-term insurance coverage in the amount of 10-20 times your present income per year. Less than that figure, for example, an endowment plan, may not cover your dependents’ financial requirements. Term plans are quite inexpensive and offer many additional benefits, such as premium return and month income. Likewise, acquire a health cover for every one of your family members. This will enable you to save significantly the money you will have to shell out from your pocket in case of medical emergency.

Do tax planning

Avoid going into panic mode at the end of the year, especially when a big TDS occurs in March. Paying tax is a one-year process and everyone has a whole year to figure out what one earned and what to pay. Hence, one needs to maximize the use of that time to determine the best ways to save tax. Section 80 (C) of the tax code, equity-linked saving plans and public provident fund can bring higher long-term benefits compared to insurance plans. Likewise, you can save more tax if you get health insurance for you and your dependent parents. Make sure that your figures for home-acquisition loan principal and interest repayments or rentals paid are accurate. In case you are fall short of exemption limits, you need to determine and invest in a tax-reducing instrument as early as possible. You can attain efficiency on FDs by not going above the interest earnings limit. Above that limit, invest in debt mutual funds for tax efficiency and bigger income.

Avail of digital payments

Digital payment has more advantages than using cash. Demonetization compels us even more to go digital, but be aware of online scams and fraud. Automating payment allows you to do the following: pay your credit card, e-wallet or netbanking bills without using cash, allowing you to earn cashbacks and reward points. Moreover, issue ECS instructions for paying your insurance premiums and EMIs. And as more people are now doing, use your debit card for any transaction. Even day-to-day purchases such as groceries and medicines should be done through e-commerce which already utilizes numerous apps and websites. The future is now here in the growing utilization of paperless financial products. The convenience of using of digital bank accounts and digital wallets should encourage you and people around you to shift to this financial format.

What does 2017 hold for us all? With the new administration in place, many Americans are figuring out ways to improve their finances and setting goals for the current year. The fact is that many of these people will fall short of their financial objectives and some will not even get moving at all, neglecting their financial well-being altogether. Start enhancing your financial health in 2017 with these 12 effective tips. Take a good look at what these expert educators, who educate experts to teach other experts and who deal with numerous financial advisors, have to share in order to raise your 2017 financial planning to a higher level. Your journey to building financial security begins with the first important step which is to learn the essential principles.

Tip # 1- Increase Your Retirement Savings

“Here are three effective steps to increase your retirement savings. First, put savings on an automatic income-withdrawal scheme, such as salary deferrals to 401(k) plans, automatic monthly payments from your checking account and amortizing a mortgage. Second, make full use of tax-friendly retirement schemes like IRAs and Roth IRAs. Third, forget this money!”

Tip # 2 – Revise Your Investment Allocations

“Considering the fresh increase in equity values, long-term investing, especially for retirement portfolios, performs much better if the stock allocation is reverted to the target allocation regularly. In short, with higher equity values at hand, the wise move is to reduce the equity load and increase the bond share.”

Tip # 3 – Do not Neglect Your Estate Plan

“A complete financial planning strategy must include estate planning as well as a family emergency program. Savings accounts, in particular, are often set primarily for emergencies. Most experts recommend a six-month compensation coverage in a liquid savings account. How do you deal with premature-death planning? Do you have the assets to take cover funeral expenses and liquidity to sustain family expenses? You must consider the targeted time frame of such expenses to determine the immediate amount needed as well as the amount that is liquid. Personal saving accounts, employee incentives and life insurance proceeds may serve to address family needs. These funds, however, must be properly set up. The individual’s will, private asset titling and inheritance provisions should be evaluated to ascertain that family needs fall within the available amount of funds and that such funds are made available when needed.”

Tip # 4 – Opt for Long-Term Investment

“Investing is a marathon, not a sprint. Build an investment plan and let the market take care of itself; as long as you stick with your plan, you will reach your goal. Historical figures from way back in 1926 to the present show that a diversified portfolio of big capitalization stocks earned an average of 10%, compounded annually. Government and corporate bonds have given about 6%. Woody Allen famously said that 80% of success is showing up. To succeed likewise in stock investment requires showing up and persevering with your original long-term goals.”

Tip # 5 – Capital Ownership is Crucial

“Aim for capital ownership. Until you choose to be taxed, appreciation is not taxed. You have control of the situation. Aside from that, your income is preferentially taxed at rates that apply for long-term capital gains. Moreover, the income from capital qualified dividends and long-term capital gains are likewise taxed preferentially. When you can already afford to be remunerated with stock instead of plain income, you stand to get more long-term benefits. Generally, what matters is not the amount paid on your investment but how you are paid.”

Tip # 6 – Take Control of Your Debt

“Only by having an effective debt management strategy can you ultimately cut the vicious cycle of indebtedness and release your potential for building wealth. An effective debt management requires prudently prioritizing your most expensive debt first, such as credit card statements, then personal debts, then deal with education loans and, next, housing loans. Nevertheless, managing debt equally involves staying away from getting another loan and finding ways to reduce spending or, at least, spending more wisely. For example, you will be surprised at how much you will save if you purchased a coffee machine instead of buying coffee daily.”

Tip # 7 – Discuss Money Maters with People Close to You

“Usually, people keep their loved ones in the dark regarding their financial situation, producing stress in their relationships. Dealing with financial issues and aspirations together with your partner will bring so many benefits. Spend time to formulate a common vision of what you want to achieve in the future. For parents, invest time to educate your children about handling money. Whether we teach them directly or not, children eventually pick up attitudes regarding the value of money. Hence, be careful how you talk to your children regarding money. Even a little pep talk will do a great deal toward teaching them good money values.”

Tip # 8 – Evaluate Insurance Coverages

“Regularly check the coverages in your insurance policy to make sure that they remain consistent with your original goals and purposes. Include all your policies, such as health insurance, life insurance, car insurance, disability insurance and home mortgage insurance. Also consider getting some additional coverage through an umbrella policy. Although insurance may not be as exciting a subject as other financial assets, it can be a valuable tool for preparing for a secure future. With respect to life insurance, always update your designated beneficiaries and values of coverage during important life events.”

Tip # 9 – Remember Your Children’s Welfare

“Plan out a way, no matter how small, to make 2017 a launching pad for your children’s financial benefit 10 to 12 years henceforth. For example, open a fund in a 529 account for a college education or the new 529 ABLE accounts for disabled children. Or, it could be a trust or a funding for a small investment account to serve as a security fund when they finish college. Such seemingly insignificant acts in the present can turn out to be lifesavers for your children once they reach adulthood. It sure beats having to keep them under your roof when they reach 30.”

Tip # 10 – Re-Financing Education

“Some people end up in a situation where they are still amortizing their college loans while trying to set aside some savings for their children. It might be the opportune time to consolidate or refinance your educational loans. Expect interest rates to rise even more this 2017 and for direct loans to vary wildly. Look for a much lower interest rate today. Consolidated loans can be accepted by repayment plans such as PAYE and REPAYE. Such plans can be appropriate for your income and, thus, help you manage payments in your early-career years. Moreover, consider your future and begin saving in 529 plans; but make sure that you become selective when it comes to 529 plans as not all of them offer the same benefits. Those plans offered in Nevada and Ohio are quite popular; but carefully check your own state’s version of the plan to find out your eligibility to avail of some special income-tax refunds or rebates.”

Tip # 11 – Make Full Use of Flexible Spending Accounts

“Maximize the use of flexible spending accounts (FSAs) offered by your company for out-of-pocket medical expenses and dependent medical expenses. The maximum FSA contribution for this year is $5,000 for dependent care FSA and $2,600 for healthcare FSA. You can get significant tax savings because monies deferred into FSAs are tax-free — whether federal, state, local or FICA. Under the proper conditions, any person may save several hundreds of dollars yearly in tax savings by contributing to FSA at maximum levels. But do not forget that there is a use-it-or-lose-it proviso in FSAs. Whatever monies you have that remain unused at yearend will be forfeited. It is crucial for you to carefully compute the yearly contributions.”

Tip # 12 – Formulate A Retirement Risk Management Plan

“Determining retirement income is not the same as saving and building up wealth for your future retirement. Firstly, the risks vary. Retirees must have a plan to address market fluctuations, their undetermined longevity and other various spending variable, for instance, a prolonged health care. Using only investments or insurance for planning is not the best method to build a plan to address various risks. Take time to begin educating yourself about retirement income to formulate a comprehensive and financially efficient strategy for handling all possible retirement risks.”

There are several crucial principles you need to know to achieve a successful financial year. Planning gives you enabling power; so, start planning. Set your savings and investment strategy on autopilot as much as possible. Regularly review your vision for your financial future. Evaluate your emergency fund, insurance coverages and your investments in 2017, to keep them consistent with your objectives.

Before December comes to an end, most people commonly write down their resolutions for the New Year. And for countless individuals, one of their goals is to "save money". Easier written than done; because in spite of the good intentions, a big majority of these optimistic people fail by the second month of the year and their savings accounts remain stagnant (if not depleted) and their spending fly out of the window.

There must be an effective way to succeed in this most challenging mission. Here are 10 suggestions to help you finally hack it.

1. Set a specific savings objective

Hit the ground this New Year running – the better to burn those holiday calories away -- with a specific savings objective for 2017. Make sure the goal you set is quantifiable, attainable, realistic and suitable. Avoid being too optimistic and setting an unrealistic savings objective, which will increase your chances of not achieving your goal.

A sensible objective for saving requires having a definite item to buy or a specific figure you can realistically attain within the year. The whole process will need enough self-control and some sacrifices with regard to spending if you hope to reach your goal. Setting a very high target may only frustrate you in the end.

The next vital step is to get a friend or relative to help you achieve your goal; or, print out your objective and put it in a prominent place to remind yourself constantly – the PC or smartphone wallpaper would be a good place. 

1. Carefully select a savings account

Be discerning about where you put your savings. Savings accounts offer different features and benefits, whether you talk about fees, interests or minimum balances. It is best to conduct an assessment and select the most suitable account. Also, be mindful of other charges, such as ATM fees and monthly service charges.

Although the interest rate may appear small to you, it can accumulate before you realize it. The thing to remember is that even tiny amounts will come in handy when you have a definite amount to attain. Also visit the websites of banks with online services as some of them offer higher interest rates on savings accounts.

1. Avail of an automatic saving scheme

The common assumption is that people lack the self-discipline to put aside a part of their monthly income for a savings account. The only solution is to go automatic by contributing directly to your account each month. Many banks can provide free services to transfer a definite amount of money from your checking account to your savings account monthly.

You may also request your HR department to deposit directly a portion of your paycheck into a savings account each month.

1. Set up an emergency fund

Your savings account can also serve as a source of money for a rainy day; but if you can take the challenge on a higher level, you can also set up a fund devoted only for emergency purposes. Unless you get into an emergency situation and you are forced to use your savings account, the primary purpose for a savings account is to cover major purchases, such as advances for a car or a house purchase. Hence, in case you get laid off from your job or need medical attention, your emergency fund will come to your aid without you having to give up your original goal of buying a car or a house.

Ordinarily, an emergency fund should be sufficient to pay for your expenses for a period of four to seven months. Financial advisers suggest beginning with a relatively small goal – say, $1,000 -- and slowly increase your target.

1. Check your monthly expenses regularly

You need to begin a thorough monitoring of your monthly expenses. That means writing down your monthly expenses and every purchase to the last cent. This will tell you exactly where your money goes and in which areas you are spending above your budget. Consequently, you can have greater control of your money, allowing you to gain a better perspective of your spending habits so you can make a more suitable budget you can follow.

It might come as a surprise to you, for instance, that you shell out an inordinate amount of money on coffee weekly. Knowing that, you can decide to reduce your coffee intake each week and put whatever you save into your savings account.

1. Set your budget

When you have a clear idea of how you spend your money, you can set a realistic budget. While budgeting may appear to be a hit-or-miss process at the start, it will eventually become a more defined and accurate process once you have finally succeeded in cutting away your undisciplined spending habits.

Remember, there is no need to stop spending for entertainment or certain perks; however, your priority is to settle your bills promptly until you achieve your goal for saving. The main purpose for a budget is to compel you to spend within your income limit in order to enhance your savings.

1. Shop more wisely

Every time you shop, be more discriminating. Earn more points by applying for loyalty programs at the shops, join a warehouse club and purchase wholesale as much as you can, use discount coupons and shop whenever there are bargains deals or knockdown sales.

Use online shopping to your advantage by canvassing comparative prices on websites and buy according to whichever is the best offer. Buy an item not because an item is merely discounted; the best deal is one that has the greatest advantage for you in terms of quality, price and other features.

1. Use apps to your advantage

Practically everything now comes with an app that makes it very convenient to acquire or avail of, whether grabbing a taxi or chatting with pals. Make good use of the technology to help you save more money.

Some apps can help you in the budgeting process, some to help you locate the best buys in your community, as well as some to let you sell your used items. Monetize all the unused appliances and stuff in your home through these apps and make your savings grow.

1. Use a flexible spending account (FSA)

Contemplate applying for a flexible spending account in your company. Some employers provide FSAs as a benefits privilege for their employees which allows you to save money on health-care expenses not covered by insurance, as well as deductibles and joint-payments.

When you have joined such a program, decide on what amount to contribute for the year. The amount will be deducted from your paycheck eventually, minus income tax. Under the program, you can take out money from the account to cover for specific allowable medical expenses, which are effectively discounted due to your tax savings. Make sure you avail of the whole amount within the year covered.

1. Monitor your progress … and when you achieve your goal, reward yourself!

In order to succeed in the budgeting process, know where you are exactly each week in your finances. Set up a time for a "money date" when you can sit down each Sunday and assess expenses to make sure you are within the set budget. In case you find yourself off the track (whether you overspent or you failed to put away even a cent from your salary), get back on track. You cannot win all battles; but aim to win the war.

Nevertheless, once you achieve your savings goals, strike up a party and reward yourself (without overspending, of course)! Aim for the middle road in your savings strategy; that means you can still shop and spend but, this time, more responsibly.

Here are basic and essential steps to follow in choosing the right investment for your specific needs and goals:

1. Assess your personal needs and goals

Take ample time to consider why you want to invest and what you want to get out of it. Since nobody knows you better than yourself, your goals and your needs, as well as your tolerance for risk, start by analyzing your daily expenses and determine where you can get the money to invest. Online apps can help you do this money fact-finding process.

1. Decide how long you want to invest

When do you need the money you will invest? Soon or much later? Depending on your goals (a home purchase will differ from a bike purchase) your time target will vary and also influence the degree and form of risks you can handle. Here are examples:

Saving for a deposit to buy a house in two or three years will not suit investing in shares or funds since their value fluctuates. Opt for a cash savings account, such as Cash ISA.

Let us say you want to set up a pension fund after in 25 years, investing in short-term assets will not do; so choose long-term options. You will end up better off with long-term investments, except for cash savings accounts, since you can level out inflation and thus achieve your pension objective.

1. Choose an investment strategy

Having set up your needs and goals and considered the risks involved, make an investment plan to assist you in determining the kinds of products that match your plan.

It is always a safe and smart move to invest in low-risk investments, such as Cash ISAs. Next, you may augment medium-risk investments, such as unit trusts which have greater volatility. Go for high-risk investments only if you already have a solid portfolio of low and medium-risk investments. Even so, the risk will be much higher and you must consider the possibility of losing your money.

1. Choose to diversify!

It is common knowledge that to enhance your success at investing, you must also increase the risk you must take. However, you can control and increase the interaction between risk and return by distributing your over a broad selection of investment choices whose prices do not follow the same pattern. This is what we refer to as diversification. Its purpose is to level out the gains and also enhance growth, as well as decrease the general risk that your portfolio can take.

1. Choose your DIY level

Before buying any stock, seek professional advice to fully understand the product.

It all depends on how much time you want to devote in investing:

For do-it-yourself-ers who want to savor the moment of making decisions themselves, try buying individual shares; however, make sure you comprehend the risks.

For people with no time to spare or are not hands-on or for those with little money to invest, the common option is investment funds, like unit trusts and Open Ended Investment Companies (OEICs). Through these products, your money is lumped with other people’s money in purchasing diverse investments.

Seek financial counsel if you are not certain as to the kind of product will fit your needs or which investment funds to select.

1. Know the fees involved

Buying stocks directly, such as individual shares, will require paying a stockbroker service fee. On the other hand, in buying investment funds, you will pay charges to the fund manager. Also, seeking the help of a financial counselor will involve paying fees.

All those fees and charges will vary according to the company involved. Inquire first how much the fees are before making any final buying decisions. Although higher charges may mean higher service quality, assess whether the charges are reasonable and whether such service can be had at a lower fee rate somewhere else.

1. What to avoid in investing

Keep away from high-risk assets, except if you comprehend quite well the risks involved and are willing to handle them. As mentioned earlier, take on higher-risk products only when you already have solid low- and medium-risk investments.

There are, of course, certain investments you must totally avoid. Seek professional advice regarding this.

1. Monitor your investments regularly – but do not time the market

Investigations show that those who invest and monitor their investments daily are apt to buy and sell too frequently and derive lower gains compared to those who let their money grow over the long haul.

Yearly reviews are sufficient to show you over time how your investments are performing and still allow you to adapt your savings accordingly to attain your objective. However, you will have to read periodic statements to obtain an educated perspective of things. To help you do this, click on the list of tips below.

Remember, avoid the inclination to react wildly each time prices fluctuate abnormally. The veteran investor knows markets can fluctuate unpredictably over time; and sticking it out allows one to smooth out the movements.

If we knew how the wealthy invest, we can begin setting the stage for our own financial success. Who else can teach us the prudent and secure steps toward increasing our chances of building wealth than the rich themselves who constantly ponder ways to do so? In spite of the fact that the wealthy also make significant mistakes that affect their gains, they remain on top of their game and bring in money, making the envy of many people. That is no accident. With diligence and the ability to get the proper financial advice, they have the knack for succeeding in enhancing their assets.

A recent Trust survey covering wealthy individuals revealed that one-third of respondents obtained their fortune by investing. Their secret, of course, lies in the right investment vehicles to choose. How can we imitate the wealthy and succeed as well? Here are some tips:

1. Portfolio diversification.Successful wealthy investors have learned that betting on single stocks, such as Tesla Motors or Apple, and hoping to catch a windfall is often a worthless and risky move. A study recently conducted by Open folio showed that the top 5% wealthiest investors had the least portfolio volatility of all respondents and had below 40% of their portfolios assigned to single stocks. Hence, desist from stock picking and concentrate more on reducing volatility and investing in diverse assets to cushion the overall negative effects of market drops. In case you now have a well-diversified portfolio, remain steady and avoid the tendency to time the market. It may come as a great challenge to many, as it also does even to veteran investors who normally have better access to valuable financial data than most ordinary investors.

1. Aim for a long-term engagement.The recent Brexit crisis and the ongoing US presidential campaign have brought anxiety to investors, causing many to sell off stocks or do various drastic changes in their portfolios. However, it is vital that investors should remain steadfast when such major market events occur. Statistically, those who patiently wait and stick to their guns are often rewarded, while others who do not, miss the opportunities provided by eventual recoveries and risk incurring transaction fees and adverse tax penalties. Only 14% of wealthy investors, according to a U.S Trust survey, gained their biggest investment returns through timing the market. Surprisingly, 86% made great headway by choosing to focus on a long-term buy-and-hold approach. Knee-jerk decisions tend to produce quite a significant undesirable effect on investors' long-term financial objectives; and that includes the building up of a sufficiently stable retirement fund.

1. Stay away from variable annuities.Variable annuities, in general, do not provide secure investments for anyone – with the exception of the cunning advisors who sell them and invariably get fat commissions from such deals. As much as possible, avoid variable annuities which involve high fees and do not provide enough investment alternatives and the desired liquidity. Opt for investments which have lower fees and greater results. And in case you decide to choose a variable annuity, make certain that you collaborate with a financial advisor who is on the level, transparent and accessible. In spite of the Department of Labor's fiduciary rule taking effect in 2017, it is crucial for any investor to be aware of their financial advisor’s fee requirements.

1. Be careful of target-date funds.Although target-date funds may appear as suitable portfolio choices, they do not necessarily fit your risk capacity, investment objectives or the other assets you possess. But as long as If you evaluate target-date funds meticulously, make certain to assess their investment approaches, fees and costs, and how suitably they will merge within your general asset distribution.

1. Be aware of the risks of alternatives.So many investors who look for bigger gains turn to alternatives, such as hedge funds, illiquid real estate investment trusts or private equity. The best option is to first analyze factors -- for instance, your age, earnings capacity, risk tendency and tolerance and investment objectives -- with the assistance of a financial advisor in order to determine if these highly risky investments suit your circumstances in the present or far into the future. In the event you both decide to go ahead and invest in alternatives, bear in mind that generally, high-risk alternatives must cover only from 5% to 15% of a portfolio.

No matter what assets you decide to invest in, whether a large-cap manager, a liquid REIT or an ETF, evaluate the advantages and disadvantages in order to weigh if they match the level of risk you can afford to take and your long-term investment objectives. By doing this, you ascertain the safety and stability of your investment and, in the long run, increase your chances of gaining higher results.

Stocks, bonds, bank accounts or IRAs? How do you choose?

With several types of investments to choose from and also thousands of sub-categories under them, finding the most suitable investment choice can be a daunting task.

First off, the main consideration in any long-term investing decision is the rate of return expected from it. At times though, investing in short-term investment can enhance your wealth even if the returns are not as high as you want them to be. You can select from among these common short-term savings vehicles:

Short-term savings vehicles

Bank savings account: The most resorted to savings medium availed of by people, which provides small returns but better than keeping your money at home where it could be stolen or spent easily.

Money market funds: These funds are a type of special mutual funds that are invested in exceptionally short-term bonds. Money market fund shares are always valued at $1 whereas most mutual funds can have uncontrolled prices. Although they pay higher returns compared to bank savings accounts, they provide lower returns than certificates of deposit.

Certificate of deposit (CD): You can also open a CD, a special account made at a bank or another financial body which has an interest rate often at par with short- or intermediate-term bonds, depending on the CD’s deposit duration. The depositor receives regular returns on interest until the account matures, at which time the original amount deposited is returned together with accumulated interests incurred. Oftentimes, certificates of deposit through banks are insured to a maximum of $100,000.

Our company is partial to stocks as investment vehicles over the rest of the long-term choices since stocks have statistically provided the best rate of return in an investment. The most common long-term investing vehicles are as follows:

Long-term investing vehicles

Bonds: There are various forms of bonds. Also known as "fixed-income" securities, bonds generate a “fixed” or set income value each year when it is sold. They are very similar to CDs as investments options although they are issued by the government or corporations and not by banks.

Stocks: Stocks allow an individual to own a portion of a company or business. A single stock share represents an investor’s proportional stake or share of ownership in a business. As the business grows, the worth of an investor’s share in it also increases. Otherwise, the worth decreases.

Mutual funds: Mutual funds are vehicles which allow investors to combine their money to buy bonds, stocks, or any vehicle the fund manager considers viable. In short, you turn over the control of your money to a professional who now has the final say as to the performance of your investment. In most cases, these "professionals" play with your money by underperforming the market indexes to their own benefit.

Retirement plans

Several special plans are intended to build retirement savings; and many of these plans permit an individual to transfer money directly from his or her paycheck prior to taxes. In support for this plan, companies sometimes match the amount transferred, or even a small portion of that amount, as their goodwill contribution to their employees’ future. In some countries, the company share is required by law at specific amounts or percentage of salaries. In some cases, these plans can provide an “advance” out of the plan to purchase a house or pay for college, at no interest. In cases where an “advance” is not allowed, an individual can take out a loan from the account, or take a low-interest secured loan using the retirement savings as security. The rates of return on these plans vary according to the type of vehicle invested in, whether bonds, stocks, CDs, mutual funds or any mix.

Individual retirement account (IRA): This type of plan lets you invest some money into a tax-deferred retirement fund – which means you will not be taxed unless withdrawals are made or before the fund matures. Regular income-tax rates apply once money is withdrawn, which are higher than capital-gains tax rates. All IRAs are considered as specialized accounts and not as investments, allowing the account holder to invest freely in any manner. Some or all of your IRA payments may be considered tax-deductible, if the holder satisfies certain requirements.

Roth IRA: Unlike the previous IRA plan, this type of retirement account requires no tax payments up-front on contribution. Rather, it provides full exclusion from federal taxes when cash is withdrawn to purchase a first home or pay for retirement. Likewise, a Roth IRA can also be utilized for other specific needs, for instances, unreimbursed medical expenses and education minus any penalty. Nevertheless, earnings which are withdrawn will be taxed as income if your age is below 59 ½ years. Only qualified taxpayers can avail of a Roth IRA; that is, if you join corporate retirement plans and are disqualified from deductible payments to the conventional IRA.

401(k): Employers provide this retirement savings vehicle, whose name is taken from the section of the Internal Revenue Code which allows it. This plan has the tax advantages and the potential benefit of corporate matching (as mentioned above), making the 401(k) a potential choice for many people.

403(b): This is the nonprofit version of a 401(k) plan. Local and state governments also provide a 457 plan.

Keogh: A specialized form of IRA that serves simultaneously as a pension plan for a self-employed individual, who has the capacity to pay substantially higher contributions permitted for an IRA.

Simplified Employee Pension (SEP) plan: This is a special type of Keogh-individual retirement plan designed to allow small businesses to provide retirement plans (for their employees) that are slightly easier to manage compared to conventional pension plans. Either the employer or the employees can participate in a SEP.

Investing in stocks

Stocks deserve a closer look as they have been known in the past to offer higher returns compared to bonds and other vehicles. As mentioned, the investor becomes a part-owner of a company. Since it was started by Dutch mutual stock corporations in the 16th century, the present-day stock market allows business-owners to raise capital to run their enterprises with the money provided by investors. This scheme makes the investor a stakeholder or a virtual co-owner of the business itself. As a token of that ownership, the stock certificate is given to the investor to serve as specialized financial "security," or financial instrument attesting to or securing an investor’s claim on the assets and income of a business concern.

Common stock

The most common type of stock is, as expected, the common stock. The common stock provides an ideal vehicle for most individuals, since anyone can participate – whether you are young, old, discriminating or easy-go-lucky. There is practically no restriction imposed against anyone who wants to buy a common stock. Nevertheless, the common stock does not merely consist of a document but an actual part-ownership of an existing business operated by real people. Through buying stocks, you participate in a very satisfying process of producing wealth which is unmatched by any other means, except probably by a fortunate turn of events, such as inheriting the wealth of a departed relative you have never met or striking a substantial oil deposit in your backyard.

In short, shareholders are part "owners" of a company’s assets and its generated income. As the business grows with more acquisition of more assets and enhanced income-production, the worth of the company also increases. This results in the increase of the total value of the business as well as in the proportional value of the stock in that business.

As stakeholders and part-owners of the company, shareholders are given the right to vote or elect the members of the board of directors. This board serves as a set of officers who supervise the primary decisions made by the company managers. These directors are the main players in the corporations throughout the world and possess great power, as a result. For instance, boards can choose to allow a company to invest in itself, pay dividends to investors, buy other businesses or assets, or repurchase stocks from its investors. Although the top managers of a company (those who operate the business from day-to-day) can provide some advice or guidelines to the board, the final decision belongs to the board members. Oftentimes, the board also has the power to hire and fire the company managers.

All is not perfect even in owning stock in a company that is doing well at any given time, as running a business has certain risks. Obviously, being part-owner or a company means sharing in the potential risks latent in any business operation. If the business does not make a positive income, the shares of stock will decrease in value. In case the business folds up, the stock will then become worthless.

Different types of stock

Sometimes, companies can opt to focus the voting privilege of a company to cover only a particular type of stock, limiting the majority of shares to only a select group of investors. As an example, a family business seeking to raise capital by selling equity might create a second type of a stock which they already control and has, for instance, 10 votes for each share, while they release to others another type of stock that allows only a single vote per share.

This, for many people, is not an acceptable deal; and so, many investors usually avoid companies having such multiple types of voting stock. Media companies often have this form of structure which had its inception in 1987.

That is why you hear of Class A and Class B shares, because of this selective classification of stocks.

What happens from now on?

That is about all you need to know for now about the fundamental classes of investment options available to you. You can start impressing some of your friends and relatives about your newfound knowledge on stocks. Use the basic terminology as well as the essential principles of becoming a shareholder of a company to tell them how they can also join in the experience of investing. Most of all, tell them of the potential rewards you and they can expect from buying stocks while reminding them of the greater risks they will encounter compared to merely keeping their money in a bank. In the end, what you will decide to do with your new knowledge will be up to you.

We encourage you to take avail of our newsletter services for a month for free. Our contributors may have diverse views on many issues; but this fact helps to provide you with a wide selection of insights and perspectives on how to succeed in investing. We have a disclosure policy which allows us to be fully transparent in all transactions.

Planning and setting objectives

Investing is a long-term process, like planning a long vacation. Ask yourself these questions before you embark on this endeavor:

• What is your destination? (What financial goals do you have?)
• How long is your vacation? (What is your time frame in investing?)
• What should you bring along? (What investments forms will you choose?)
• How much gas do you need to use? (How much will you invest to achieve your goals? How much can you invest a regular plan?)
• Do you have stopovers on the way? (What short-term financial expenses do you have?)
• How long is your vacation? (Will you have to retire using your investment?)
• If you run out of gas because you frequently stop to rest and drive through the night, you are bound to spoil your vacation. So it is if you do not save enough money, if you invest haphazardly or fail to invest at all.

Answer these questions judiciously and honestly. Muddling through this process of self-examination and preparation will cause you to see the finer points of investing which requires a lot of number-crunching. Calculate accurately how much a college education will cost and how much you will need during your retirement years. It will not only be satisfying to know that you can actually attain your destination, you will also remain aware of what you must do along the way in order to fulfill your future goals.

In case you are panicking because you consider numbers to be a great challenge, do not be alarmed. There are user-friendly online interactive calculators which can assist you estimate your financial goals. As we said, the more realistic and detailed your figures are, the greater the chances of setting and realizing viable goals.

How stock trading works

Now that you have set your finances in order and you have also established definite financial objectives, you are now ready to learn how to begin investing. With mutual funds, the procedure is quite easy: Call the fund company and request them to open an account for you. Dealing with stocks can be a more challenging endeavor.

Stocks are traded at various stock exchanges. The major US exchanges are the New York Stock Exchange (NYSE), the American Stock Exchange (AMEX), and the Nasdaq Stock Market. Although there are differences in the manner these exchanges perform their trading, the process itself of buying and selling shares requires a similar process in all of them.

Stock exchanges are where buyers and sellers connect. The buyers make a "bid", which is the price at which they are willing to buy a share, while sellers “ask” the price at which they are willing to sell their shares. The “spread” is the difference of the two prices, which often goes to the professionals who manage trades in exchanges.

Depending on the amount of shares traded on a certain day or period, the value of the spread will vary. For traded stocks which are making brisk sales, the spreads will tend to be very small because of competition. Conversely, the spread will tend to be large for stocks being traded thinly, to cover the risk that exchange professionals have to take.

Any investor can establish a bid or ask price by placing orders to buy or sell at a certain price. Such orders are referred to as “limit” orders. Exchange professionals monitor these "open" orders, executing them when conditions are satisfied and utilizing these orders to determine preference for the stock.

Buying stocks is primarily done through brokerage accounts. You may choose between two options: the overly high-priced full-service brokers, or the discount broker. To know more about picking brokers, visit our Broker Center, comparing brokers and choosing the best one who can open an account for you.

The dangers of margin

Through a brokerage account, you can choose between a cash account or a margin account. A cash account allows you trade using available money you are willing to invest. A margin account allows you to buy stocks using other people’s money – which you borrow. Margin accounts can be attractive for obvious reasons; however, the risks can be significant.

Some brokers will advise you to opt for margin as they have hidden interest in doing so, using greater "buying power" as a lure. Remember that what you increase is not only your "borrowing power" but also the risks you take.

Moreover, brokers get some of their killing through collecting interest on margin loans – a sort of commission. The two words (broker and commission) were born twins! As investors borrow more money to buy more stocks, the brokers (who promote margin accounts) collect more commission fees. The broker possesses complete control over the loan collateral, while having the power to interfere and compel you to sell stock in case you are defaulting on your loan. Warning: Margin will milk you dry while the broker gets all the milk and honey.

Direct investment plans (DIPs) and Dividend reinvestment plans (DRPs)

If you think you are not up to opening a brokerage account yet, other plans can provide a different but sure way to buy stock. Nicknamed by investors as Drips, these plans let shareholders buy stock from a company, directly and at low costs or fees. Only a few firms offer these plans, although they are best for investors who only have limited amounts of money to spend at regular periods.

Summary

Now that you have gained enough background information on how to start investing in stocks, as well as what your financial goals are, how much money you will need to invest, how long it will take to recover your investment, the next move is to begin considering where to invest and the kind of potential gain you hope to make.

You can get more info from our newsletter services which we offer free for one month. Our contributors may have diverse views on many issues; but this fact helps to provide you with a wide selection of insights and perspectives on how to succeed in investing. We have a disclosure policy which allows us to be fully transparent in all transactions.

What is investing all about? How do you start?

If you have decided to enter the world of investing, learning how to invest must now dominate your time and focus. Two steps will help you on your way.

Initially, you need to rebuild your financial outlook to prepare yourself in investing. After that, learn the technique of investing, for example, how to open a brokerage or a mutual fund account. These basic steps will launch your course to a meaningful and productive investment life.

Defining investing

In essence, investing involves spending your time, effort and resources to attain a higher objective. For instance, you spend weekends with a social group to do charitable work, use your talent in the arts to create works of beauty and value or apply your profession in your job or your business to earn a living. In the same way that you do these things hoping to gain valuable rewards, you likewise invest your money in a bond, mutual fund or stock with the goal of achieving material benefits in the future.

Specifically, investing requires putting your money into what is called a "security" -- a term which refers to anything that is "secured" by other assets. Bonds, stocks, certificates of deposit and mutual funds are some forms of securities you can choose to invest in.

You can select from various methods of investing -- some of which you may be familiar with from watching TV or browsing the Internet. You see a neatly-dressed, overly optimistic lad who stares at you onscreen, seated on a porch in Malibu Beach and fully hyped as to how amazingly easy it is to make big bucks in no time at all! Amusing, it all seems. For if it was really that easy, everyone would have learned the technique to such foolproof method. Unfortunately, only those promoting such wealth-building schemes seem to make money – and at the expense of many disappointed gullible takers.

So, here is the better option for you: Instead of spending $25 on the hardcover EZ Secrets to Untold Billions book and $500 for the EZ Seminar, invest it in yourself once you have gained the fundamental secrets to investing here.

Eradicate your debts now

Now that you are eager to go ahead and start investing once you learn how to, you certainly would want to know the next step. But rein in your enthusiasm for a while. Hold your horses while you check if you are really ready to take the ride of your life in investing. Now that you see the possibilities opened to you through the magic of compounded returns, you have to protect yourself from the same trap which you could be unwittingly locked in. Do away with high-interest debts that you may have at the present.

By the exact same law of compounding rates that will make your investments increase, you can rapidly incur hundreds of dollars in debt over time from a dollar. Having such an enormous debt as you invest would negate all your efforts in investing and saving your money. You will be better off as you are paying off your debt first, than risking your money and exposing yourself to greater danger. Hence, it is wiser to get rid of any high-interest debt first before you consider investing, although some low-interest or tax-advantageous debts can be tolerated.

Make each dollar you invest work for you; this is a mantra you can trust to protect you. This is because each dollar you keep from the hands of full-service brokers or financial professionals will build more wealth for you, as you will soon see.

Reward yourself first of all

To succeed as an investor, you must make investing an integral part of every day. That may sound difficult or tedious; but not really. You must realize that the act of buying something, say a cappuccino, will influence your daily finances as much as acquiring a home-equity loan to cover your credit-card payments.

That is not to say that you must act like a miser who cannot get a good night’s rest over a missing penny in her books. If you reward or pay yourself first, you need not worry so much.

Since you already spend valuable cash for such essential things as gas, water, electricity, credit cards, cable TV, phones and wifi access regularly, why not be the first to get your own precious money – be on top of that list! Keep a certain amount of cash as saving or self-investment each time you get your monthly or weekly check; and go on along as merrily as you can while that money grows over time.

We recommend that you stash away as much as you can; with at least 10% of your annual salary of your gross pay as a reasonable target. Without neglecting your liabilities, you may surprise yourself how much you can save over time. Unless you do it, you will never find out. Of course, the higher the target you set for yourself, the more savings you will create. Save a little; it will come in handy when you need it. The only future you can look forward to is that one you secure for yourself today.

Make good use of online banking and brokerage-service providers. You can set up regular automatic money transfers from your checking account to your savings account (or vice-versa) or from any investing instrument you prefer. Discover how you can live on a lot less than what you spend now; start with discarding some luxuries or any unnecessary trips to the mall or the bar. You will notice a significant difference within a month or two. If you think the sacrifice is not worth the money you saved; then spend it on a trip to a dream destination and see how saving can alter your life in radical ways.

It is never too late to start saving. If you have practically nothing left after all the bills payment, try to reduce the amount you set aside regularly. Maybe the timing is not right for you yet if you find out you cannot afford to squeeze in even a piggy bank. No worries; wait till you are in a position to do so.

Active and passive methods of investing

There are two primary methods of stock investing: active and passive management; and they differ on how stocks are chosen, not on how you choose your verbs. Active investing involves selecting stocks yourself or you can ask your brokers or fund managers to pick the stocks, bonds, and other forms of investments. Passive investing requires you to let your holdings follow an index which a third party makes.

In general, stock investing means active investing. Although it seems preferable over passive investing, active investing does not always turn out to be better. Over the long-term duration, most actively-managed stock mutual funds have not reached the level of the S&P 500 Index, the dominant standard for index funds.

Because of that, some investors choose an alternative to "active" investing. A lot of people prefer passive investing as they are satisfied with a return close to that of a major stock index. You may choose to follow other indexes, such as the Russell 2000 for small-cap stocks, the Wilshire 5000 for the broad market as a whole, and other global indexes.

Speculating versus investing

Perhaps, you may have heard of a close friend who struck it rich with options. Or you may have had moments of lucky streaks in the past where you won a sizeable amount of cash from a raffle or lottery. Why should you then enter into a long and slow process of investing your money which can only bring you a double-digit gain and not bundles of cash right away? Investing demands years of patience before you can finally reap the good harvest. What if you cannot wait that long?

Life does not always bring sunshine and roses when you want it to. We all know that. You will not become a celebrated investor like Warren Buffet if you match the performance of the S&P 500. Neither will losing your savings on some speculative gamble make you a hit overnight nor being in a bankruptcy court after you lose all your other assets later on.

If high-stakes gambling is the thrill you seek, plus all the appurtenant live shows and glittering lights, you are no different from those stock market gamblers who lose their money on apparently legitimate pursuits. We live by the axiom that investors "gamble" each time they put money in a venture they do not understand.

It happens to so many people. They overhear a story from their doctor’s plumber talking about a company named Sweet Pipes at a garden show. "This stock will fly like a rocket in a few months," he whispers. If you rush home and tell your broker to buy 200 shares, you might as well be in Las Vegas!

What business is Sweet Pipes engaged in? Tobacco or garments? Have you any information about its main competitor Bronze Arches? How much did it make last quarter? You need to know a lot more about the company before you toss your precious money to it. Ample study and evaluation can save you a lot of money and anguish.

Speculating, in the end, is a sure way of losing the potential value of your dollar to build lasting wealth for you. It leads you to think of the great gain you can achieve right now while failing to do so, more often than not. On the other hand, your patience in investing can assure you of attaining your goals eventually.

Getting old can bring about so many challenges which schooling and early experience could not train and prepare us sufficiently to eliminate or minimize the pain and loss. Take the case of Max Tharpe, an accomplished photographer, who managed to inherit a large stash of stocks which afforded him a comfortable life in retirement. Having no heirs to pass on his estate, he chose to donate his wealth to charitable church groups when he turned 87. And so, one day he went to the office of Edward Jones & Co. in Fort Lauderdale, Fla. in 2007 for that very purpose.

In February 2008, Mr. Tharpe asked his stockbroker to sell only one position, his Wachovia Bank shares, whose branch had given him such poor service. He also told the broker to maintain all the rest of his portfolio. And this is when the whole thing blew.

Based on the arbitration award handed down by the Financial Industry Regulatory Authority, or Finra, and the narrative account of Todd Zuckerbrod, Mr. Tharpe’s lawyer in the case filed against Edward Jones and its broker, William Holland, the story chronicles the extent to which scammers will go to fleece their clients, even the elderly.

It seems Holland took his sweet time, spending eight months to dispose of 30,464 Wachovia shares in a falling market, while making 81 unauthorized purchases using the sales proceeds. Holland also convinced Tharpe to liquidate a fully-matured insurance policy and to purchase an annuity in which Tharpe paid Holland a fat commission of $49,549.

How could a broker do that to an old man who probably lived a big part of his time visiting or staying in the hospital? An old man who had no way to comprehend, let alone suspect anything wrong with the insurance switch or even with his brokerage account. As he described the testimony at the Finra hearing, Atty. Zuckerbrod stated, “Mr. Tharpe was hardly focused; you could be conversing with him for a few minutes and then, all of a sudden, he would be talking about B-52 bombers flying in the skies.”

This kind of thing can happen to any elderly person – to you or to your parents. You could be 85 or so and still be smart enough to appreciate Warren Buffett’s counsel about index funds. However, two to three years down the road, you could become a sitting duck to clever cons out to cut 20% off your gains who share nothing to cover part of your losses.

Buying investments can seem daunting if you haven’t done it before. Follow our step-by-step guide.

• Do you need help?
• Checklist for buying investments

Do you need help?

Have you decided what type of investment you want? Are you reasonably sure of what investment or product features you are looking for? If not, consider going to a financial adviser. The adviser will help you with these choices and with the buying process.

Checklist for buying investments

Are you intending to buy individual shares? You need to use a share dealing service and the cheapest tend to be online. You can find out about different types of service and search for a provider by:

• Visiting the Wealth Management Association website.
• Using the Investors Chronicle stockbroker comparison tool and table.
• Are you looking at investment funds? Use the Investment Association website to find out more about the types of funds available and where to go for more information. To compare these and other types of funds in more detail, you could look at specialist sites, such as Trustnet and Morningstar.

Where to buy investments

• Decide how you want to buy – for example, going direct to the provider, through a fund supermarket or through a broker. Usually you will buy online or by phone. Follow the link below to check out your options.
• Before you buy, consult the Financial Services Register run by the Financial Conduct Authority (FCA) to check the firm you decide to buy through is authorized to provide the types of investment or service that you’re interested in. If a firm isn’t authorized, report it to the FCA or police and do not do business with it.
• Read the Key Facts or Key Investor Information document for the investment before you buy. These documents set out important information that the provider must tell you (not required for single holdings of shares). If there is anything you do not understand, contact the provider for further details. If you are still unsure, you may want to consult a financial adviser.
• Check what fees and charges you will have to pay. Charges for the same product may vary according to how you buy or which broker you choose. So compare the cost of buying through different routes and firms.

Understanding investment fees

Check how you will be able to manage and keep track of your investment. For example, will you be sent regular statements? Will you have an online account? What’s the procedure for cashing in your investment later? How will you and the provider normally communicate – by email, online, phone, post?

Get more informed about investing

• Be suspicious if an investment seems too good to be true. Unless you can check what you are being told against an independent, trusted source, report the firm selling it to the FCA and walk away.
• Don’t be swayed by offers that require you to make up your mind today. It’s better to take your time to consider a deal properly even if it does cost a little more rather than be rushed into an expensive mistake or a scam.

A beginner’s guide to scams

• If the firm you are dealing with puts pressure on you in any way, don’t do business with them. They may want you to take a quick decision without time to consider whether the product is right for you. Or they might pressure you to buy a different type of product to the one you wanted, or invest more than you intended. Instead, use a different firm that you’ve checked is authorised by the FCA. Or, get independent advice.

High risk investment products

Beware toxic savings and investment products

• Once you have decided to buy, follow the firm’s instructions for going ahead with the deal. You will probably have to provide evidence of your identity and address - even if you have bought online or by phone, you may need to do this by post or in person at a local branch.
• Carefully read the documents you get confirming your investment. Are the details correct? Do you have a cooling-off period? If you do have a cooling-off period, this is a chance to reconsider your investment and change your mind if you want to

If you’re looking to invest, buy a financial product or plan for the longer term, whether or not you need financial advice will depend on a number of factors such as what product you are looking for, how complicated your finances and personal circumstances are and your short and long-term goals.

• What services do financial advisers offer?
• Types of financial adviser
• What are the benefits of getting advice?
• So when do you need financial advice?
• Find a financial adviser
• What services do financial advisers offer?

Professional financial advisers carry out a ‘fact find’ where they ask you detailed questions about your circumstances, your goals and how you feel about taking risks with your money. Then they recommend financial products that are suitable and affordable for you.

Types of financial adviser

Financial advisers offer services ranging from general financial planning and investment advice, to more specialist advice, such as the suitability of a particular product such as a pension.

In the case of investment products, some advisers are ‘independent’ – meaning they offer advice on the full range of investment products from the market, while others offer a ‘restricted’ service meaning that the range of products or providers they will look at is limited.

What are the benefits of getting advice?

If you buy based on financial advice and a recommendation, you should get a product that meets your needs and is suitable for your particular circumstances.

Depending on the type of adviser you use, you may also have access to a wider range of choices than you’d be able to assess realistically on your own. You also have more protection if things go wrong if you buy based on advice – see below.

The difference between advice and ‘non-advised’ sales

Many banks, building societies and specialist brokers will talk you through your different options and leave it up to you to decide which product to take. In this case you are buying based on ‘information’ and have fewer rights to claim compensation if the product turns out to be unsuitable.

By contrast, if you end up with an unsuitable product after getting advice and a recommendation you could have a case for ‘mis-selling’ – though this doesn’t protect you against making losses if the market goes up or down.

What do you pay for financial advice?

The rules on fees for financial advice changed from 31 December 2012. If you are looking for general financial planning advice or for advice on buying particular investments you will pay a fee. Advisers must be clear upfront about what their fees are and agree with you in advance how you will pay them.

Before these changes, many financial advisers didn’t charge, but instead received a commission which was deducted from the customer’s initial or ongoing investment payments.

The changes were introduced to help make the cost of financial advice clearer and so that you can be sure the advice you receive will not be influenced by how much the adviser could earn from the investment.

Mortgages and most insurance products are not affected. However, some mortgage brokers may still charge upfront fees for advice, while others receive a flat rate introducer’s fee from the product provider. Receiving mortgage advice directly through your lender is usually free.

Is it cheaper to buy without advice?

You won’t have to pay an advice charge if you go direct. But you should weigh up the cost saving against potentially buying an unsuitable product or one which gives poor returns.

Advice can help you buy a better product than one you choose yourself. An adviser will also have the expertise and knowledge to find better options, as some products are only available if you go through an adviser.

So when do you need financial advice?

The answer partly depends on the product and partly on other factors.

Cash savings products

If you’re looking to put money into savings accounts, cash ISAs or fixed rate savings bonds it’s easy to DIY using comparison sites and tables. Because of the low risk you don’t need to get financial advice and you can buy directly from providers very easily.

Investments

If you’re thinking of investing in shares, unit trusts and other investments, you can go DIY but it will be more risky because these products are harder to understand than savings. There’s also a risk that you might lose money or buy a product that’s not suitable for you because you don’t understand it. So you really need to do your homework.

Ask yourself these questions:

• Do you have the time to do the research?
• Do you have much experience, knowledge or skills when it comes to investing?
• Can you afford to lose any money?
• If things go wrong, are you comfortable taking responsibility for any bad investing decisions?

If the answer to any of these is ‘No’ then seeking financial advice may be your best option. When trying to decide, also bear in mind the cost of fees against the financial and emotional cost of getting it wrong if you buy without advice.

Insurance or mortgages

Some insurance products and mortgages can be purchased using price comparison websites, or bought directly from suppliers.

However, there are also plenty of specialist brokers who will talk you through a range of options and may be able to get you a better deal. It’s up to you whether you buy with or without advice.

Pensions

If your employer offers a workplace pension they may also offer you access to advice or provide guidance about joining their scheme. You should take up this offer if available.

If you’re looking to invest in a personal pension, to boost your existing pension or to merge different pots from existing pensions it’s usually best to get advice unless you really understand how these products work.

Pensions are long-term investments so you need to be sure you understand the types of fund you’re investing in, the risks and the suitability for your particular situation.

Find a financial adviser

If you think that financial advice is for you, read our guide below to understand more about independent versus restricted advisers and to link to organizations that will help you find an adviser in your area.

By: Kyle Woodley

U.S. News & World Report ranks the best exchange-traded funds for tech lovers.

Semiconductors, software and IT services.

The heart of the technology sector's earnings season typically brings with it a lot of big swings, even in the bluest of blue-chip tech stocks. But you can avoid the volatility from quarterly tech earnings season by getting some of your exposure in a more well-rounded way: via exchange-traded funds, which let you invest in the sector as a whole, or in specific industries such as Internet companies or semiconductor makers. Here's the top 10 tech ETFs as of this writing, as ranked by U.S. News & World Report.

1. Vanguard Information Technology ETF (VGT)

The dirt-cheap VGT is also a strong performer, beating out the S&P 500 in total returns at 143.46 percent to 136.74 percent since inception in late January 2014, and it's no slouch at $9 billion in assets under management. Still, the XLK has the overall performance advantage, with 148.72 percent gains in that time. VGT is similarly constructed, though telecoms like AT&T and Verizon Communications (VZ) are utterly absent. If you're driven by paying the absolute least for broad tech exposure, you'll want to lean toward VGT.

1. Technology Select Sector SPDR ETF (XLK)

The XLK is the gold standard for tech funds – both the well-recognized and the largest with nearly $14 billion in assets under management. The XLK is a collection of all the tech favorites – Apple, Microsoft and Facebook, though it also features AT&T (T) in its top five holdings. The XLK also is one of the cheapest tech ETFs out there, and it even has a performance edge over the lifetime of the top-ranked fund out there, which we'll look at next.

1. Guggenheim S&P 500 Equal Weight Technology ETF (RYT)

The RYT is, as the name would suggest, an equal-weight fund that invests in the Standard & Poor's 500 index's tech stocks -- 68 blue-chip names. Thanks to the equal weighting methodology, no stock makes up more than 1.7 percent of the holdings. RYT has a heavy bent toward IT services and semiconductors, each at nearly a quarter of the fund. One note with the last of our equal-weighting funds – the methodology provided better diversification, but in the tech sector, not always (or even often) better returns.

1. iShares U.S. Technology (IYW)

The IYW would seem to be pretty spread out given that it has 140 holdings within America's tech sector. However, this fund is extremely concentrated at the top, with the top five companies representing more than half of the IYW's weight. Apple alone is a massive 17 percent of the fund, and Microsoft and Alphabet (GOOG, GOOGL) each take up 12 percent. This is a great fund when all is going well for technology's most blue-chip stocks, but when the chips are down … watch out.

1. iShares Exponential Technologies ET (XT)

The iShares' XT ETF aims to be at the forefront of the tech sector's prevailing trends, using what it calls a "unique evaluation process to identify companies developing and/or leveraging promising technologies." As a result, XT is invested in things such as 3D printing via 3D Systems Corp. (DDD) and Indian IT outsourcing via Wipro (WIT). This is another equal-weighted fund, with no stock making up more than 1 percent of the fund. Nearly 30 percent of the fund is invested in health care technology.

1. iShares North American Tech ETF (IGM)

The IGM is another broad-based tech fund, with this one focusing on roughly 275 North American tech companies. This is a traditional cap-weighted fund, so 30 percent of the fund is concentrated in its top 10 holdings, led by MSFT, AAPL and FB. However, investors are treated to a decent industry spread, with double-digit portions of the fund invested in five areas, including Internet software, storage and semiconductors. Internet retail comes close at nearly 9 percent of the fund.

1. Fidelity MSCI Information Technology Index (FTEC)

The FTEC is a broad-based ETF, focusing on mostly large-capitalization, growth-oriented stocks within the tech sector. Thus, you get consumer-facing hardware companies like Apple, software companies like Microsoft, Internet companies like Facebook (FB) and even payment tech companies such as Visa (V). While the FTEC is diversified in that it holds nearly 400 companies, this still is a top-heavy fund, with the top five companies weighted at nearly 45 percent, including a 13 percent-plus weighting for Apple – a common theme among many big tech ETFs

1. Market Vectors Semiconductor ETF (SMH)

The SMH also invests in the tech sector's semiconductor subsection. This is a very niche ETF of just 26 holdings currently, all involved in the production or other aspects of the chip business. Top holdings Intel Corp. (INTC) and Taiwan Semiconductor Manufacturing Co. (TSM) make up more than a quarter of the fund, but SMH offers some geographic diversification – a little more than 30 percent of the fund is invested in stocks from Taiwan, the Netherlands, Singapore, the U.K. and Bermuda.

1. SPDR S&P Semiconductor ETF (XSD)

The XSD is a diversified, balanced fund of semiconductor companies, almost all of which are in the U.S. What is notable is its equal-weighting methodology – XSD weighs each of its 40 holdings the same at each rebalancing so no one stock has an outsized effect on the ETF. However, weights do fluctuate in between rebalancing depending on performance, so currently; top holdings are Inphi Corp. (IPHI), Nvidia Corp. (NVDA) and Advanced Micro Devices (AMD).

1. iShares Global Tech (IXN)

You would imagine that the iShares Global Tech ETF took a worldwide view of the technology sphere, and you'd be less than a quarter correct. Less than 25 percent of the fund is invested in domiciled outside of the U.S.  with Japan leading the way at 5.1 percent. With heavily weighted top holdings such as Apple (AAPL, 12.5 percent) and Microsoft Corp. (MSFT, 8.9 percent) this fund shares a lot in common with most other broad tech funds.

Although the use of financial planners is growing, most Americans still tend to take a do-it-yourself approach to building a portfolio and saving for retirement.

Forty percent of respondents in a 2015 survey by the Certified Financial Planner Board of Standards say they utilized financial advisors, an increase from 28 percent in 2010. And while most people are handling their own finances, there are distinct advantages to hiring a professional.

A financial advisor can give investors the discipline to resist investing or divesting reactively, says Angela Coleman, fiduciary investment advisor at Unified Trust Co., headquartered in Kentucky. "We take the emotion out of it," Coleman says.

With the Internet, the world is awash with financial advice, and professional financial advisors can act as a filter, says Andrew Barnett, relationship director at Global Financial Private Capital in Sarasota, Florida.

Financial advisors are a good option for helping clients assess their risk tolerance and then build a portfolio that actually meets what they want, says Drew Horter, founder and president of Horter Investment Management in Cincinnati. He says many people who want to be conservative with their money actually have portfolios that are riskier than they'd like.

Kimberly Foss, founder and president of Empyrion Wealth Management and author of "Wealthy by Design: A 5-Step Plan for Financial Security," recommends interviewing two or three advisors and having one to two meetings with each because this is a relationship that will last "hopefully for the rest of your life," she says.

There are hundreds of thousands of personal financial advisors in America — 249,400 in 2014 according to the Bureau of Labor Statistics — so how should retail investors pick an advisor, whether they are independent or work with a large brokerage, a regional bank or an insurance company?

Consider the fiduciary standard. Barnett advises people to seek advisors who are fiduciaries, which means they are legally responsible to put the clients' best interest in mind before their own.

Non-fiduciary advisors are required only to sell clients what they think is suitable for them. "Dealing with a fiduciary, I think, is critical," Coleman says.

The Department of Labor recently approved a new rule that would require all financial professionals who offer investment advice for retirement accounts to follow the fiduciary standard. But while that rule covers investments in IRAs and 401(k)s, it doesn't impact advisors who are recommending investments for a taxable brokerage account.

Know the pay structure and fees. Coleman recommends that people not pick advisors that are paid solely on commission. An alternative is fee-based advice, where clients are charged a set percentage of assets under management, she says.

Clients with fewer assets to manage may want to choose a fee-based advisor that charges by the hour or a flat annual fee, Coleman says.

Barnett notes that there are now more products such as annuities or real estate investment trusts available as fee-based products.

Opinions vary, but advisor fees could be anywhere from 1 to 2 percent of assets under management. If you have a lot with a financial advisor, that extra percent could be a tidy sum.

This fee is separate from other fees, such as those that come with mutual funds that are disclosed in the prospectus, so it's important to ask advisors if they can break down all the costs of investing, which can include trading, custodial, accounting and sales fees, Barnett says.

Do your homework. Investors should also check into an advisor's background, Coleman says. Know what certifications the advisor holds, and ask advisors for a list of current clients as references.

If an advisor won't provide references, that is a sign of a problem, she says.

In addition to references, investors should ask for an advisor's performance track record, Foss says.

Because a client may have a financial advisor for decades, it's important to find someone they like and trust.

Sometimes that can be accomplished by getting to know the advisor, Coleman says, "Find someone you've got a good rapport with."

Investing in shares is not without risk, but if you do your research and can commit to a long-term strategy you could prosper. Esther Shaw reports

Like many people who want to make their savings work for them, Louise Dungate has become increasingly frustrated by low interest rates. Undaunted by the prospect of taking a risk, the knitwear designer from Balham in south-west London decided to dip her toe in the stock market in an attempt to get a better return.

Despite the unsettled financial climate, the decision has proved profitable for the 29-year-old following her first investment 18 months ago. “Prior to that I’d had money in cash Isas,” she says. “As I’m self-employed I don’t have a regular salary, and need to make my money work as hard as it can.”

Dungate made her first investment in a self-invested personal pension (Sipp). More recently, she opened a stocks-and-shares Isa. “My Sipp now includes investments with Unilever and Lloyds. In the past 18 months I’ve seen the value of my portfolio rise by 4.74%,” she says.

Turning to the stock market could be a more attractive proposition for savers at present, with rates on cash at rock bottom. Ongoing low inflation, weaker economic data, global uncertainties and the weakness in the oil price mean there is little pressure on the Bank of England to raise interest rates any time soon.

Already, tens of millions of people have exposure to the market through their pension pot or Isa, but it’s been a turbulent start to the year. “It’s the worst start on record, in fact,” says Jason Hollands from adviser Tilney Bestinvest. “Markets have reacted to poor economic data from China. The FTSE 100 has been hit hard.”

But while the FTSE may have plunged, one of the upsides of lower share prices is that dividend yields have leapt up on many of these shares.

“The current yield on shares has increased significantly over the past nine months, with the yield of the FTSE 100 index now at a very attractive 4.25% per year,” says Patrick Connolly from adviser Chase de Vere. “The yields on some well-known individual shares look even more enticing, with HSBC at 7.6%, BP at 8.3%, Shell at 9% and Glencore at 14.4%.”

When you invest in shares, income is distributed in the form of dividends. These payments are usually made half-yearly as a reward for holding the company’s shares. As a shareholder you can either take the cash or use the money to buy more shares in the company. Reinvesting dividends can dramatically boost returns over the long term – provided the shares go up.

With yields looking good – Shell, for example, has committed to paying a dividend for the next three years – savers may be wondering about investing their money. The problem is, while the possibility of high yields is appealing, this doesn’t tell the full story.

“Income yields show the level of dividends paid as a proportion of the share price,” says Connolly. “The reason why many shares have attractive-looking yields is because their share prices have fallen, rather than because companies have been increasing their dividend payouts. It isn’t a good position for an existing investor to have a high yield on their shares if this is the result of them having already suffered a big capital loss.”

Many companies, and particularly in sectors such as oil and commodities, he says, are under pressure. “It would be no surprise to see some companies cutting the level of dividends they pay. This could, in turn, lead to further falls in their share price.”

Damien Fahy from finance website MoneytotheMasses, says: “Would-be investors shouldn’t just focus on the current yield of a share. They also need to focus on the likelihood that the dividend will be maintained – and indeed increased – year on year. Shell may have committed to paying a dividend for three years, but elsewhere there has been a swathe of companies cutting dividend payments.”

For Dungate the hope to getting a higher return on her money is worth the risk. “I appreciate that investing in the stock market is risky, but I’m willing to take this risk in the hope of getting a higher return. I’m not investing everything I have, and am prepared for the ups and downs.”

Should you take the risk?

While rising stock market yields may make shares more attractive than other asset classes – such as fixed interest, property and cash – you need to be aware of the risks involved.

“Unlike a cash savings account, investing in the stock market risks losing money,” says Justin Modray from finance site Candid Money. “It’s all very well enjoying a healthy dividend payout, but this may be little consolation if stock market falls mean you’ve lost 10% of your original investment.”

If you are simply fed up with the low rates on cash savings but would endure sleepless nights worrying about the prospect of losing money, the stock market is not for you. “It is better to put up with poor cash returns and sleep peacefully knowing your money is safe,” Modray says.

This is a view shared by Danny Cox from adviser Hargreaves Lansdown: “While the yields may currently be attractive, those uncomfortable with capital risk should stay in cash.”

Invest for the long term

That said, if you are happy with the idea of taking on some risk this could be the time to take the plunge.

“Right now the average variable rate cash Isa is yielding just 0.85%,” Cox says. “This makes the yields on stock markets look very attractive. Equally, investors who brace themselves for the ups and downs will look back at this as being a decent entry point. The UK markets are reasonable value, and a long way off their all-time highs – so provide long-term profit opportunity.”

The key is to only invest money that you can afford to leave there for at least five or 10 years – to smooth out any bumps in the market.

“The volatility of the markets may be off-putting for first-time investors, but the increased investment risk does mean that over the long term there is the potential you could achieve greater than you would from a savings account,” says Fahy. “According to the Barclays Equity Gilt Study equities have produced an average return of around 5.5% a year over the past 50 years. However, in that time there have been big market falls as well as rallies.”

HOW TO GET STARTED

If you are investing in the stock market for the first time, you need to tread carefully. Decide what you want to achieve, how long you are planning to invest for, and how much risk you are prepared to take. Does your homework or take advice – visit unbiased.co.uk, a website that helps you search for local financial advisers?

■ Investment funds investing in individual shares after researching a company carries a high risk. Reduce this by investing in a range of shares through investment funds.

■ Equity income funds for those looking to invest in companies with healthy dividends. Equity income funds typically invest in a spread of FTSE 100 companies. Top picks from Tilney Bestinvest’s Jason Hollands include Standard Life UK Equity Income Unconstrained, Ardevora UK Income, and the smaller company-biased Unicorn UK Income fund.

■ Shop via a platform Good for first-time investors, DIY investment platforms resemble an online supermarket from which you can select from a range of investments provided by different companies, but which are purchased and held in one place. These allow you to mix and match funds from a range of managers, plus you can access a wealth of research, information, tips and tools. Remember to look at the service offered as well as any administration charges, dealing fees and any other extra costs. Platforms include Hargreaves Lansdown, Bestinvest, and The Share Centre.

■ Costs Obviously these vary, and the cheapest option will depend on the types of investment you want, and how big your portfolio is. If you invest in funds expect to pay between 1% and 2% in charges. If you want someone else to run a portfolio of trackers for you – and do the asset allocation – Nutmeg is an option. With annual fees of between 0.3% and 1% it may be a good option for novice investors.

■ Use your Isa If you’ve not used your Isa allowance it is worth popping your funds or shares inside this tax-efficient wrapper.

■ Drip-feed your money Reduce the risk of market timing by investing regular premiums on a monthly basis rather than putting in a lump sum. That way if the market falls you simply buys at a cheaper price the following month. You may be able to invest from as little as £25 a month.

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