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Considering how you’ll invest and save for the future can be an overwhelming task. Some of the uncertainty in investing can be eliminated by seeking professional investment services in Milwaukee. However, knowing a little bit about investing before you visit with a financial manager can provide you with significant piece of mind. You probably already know that the best way to secure your financial future is to make a plan, save and invest in the long term, and to investigate before you start invest. However, you may not know all of the different types of investments and how they work! Here are a few common investment terms and their meanings, so you can meet with potential investment service providers without feeling like you’re in over your head. Stocks When you buy a stock, you are buying a bit of the equity of a company. Essentially, when you buy a stock, you’re buying a tiny part of a company. If the company does well, the value of your stock increases. If a company loses money, the value of your stock decreases. Companies issue stock for a variety of things like paying down debt, investing or launching new products or expanding into new markets. Just like opening your own business balances a risk with the possibility of great reward – so too does buying stocks. Typically, stocks offer the best growth potential of investment products. However, investing in stocks also is riskier than many other investments. Financial experts agree, however, that investing stocks over the long-term is less risky. You can buy stocks through direct stock plans. For example, some places of business sell stock directly to their employees at specific times, generally at a slightly better price than what’s available to other investors. You can also purchase stocks through a broker or through a mutual fund that invests primarily in stocks. Mutual Fund Mutual fund companies pool a variety of investments together into one fund. Investors buy mutual fund shares, which represent a buyers’ ownership in the fund. If you participate in a 401K through work, you are likely investing in mutual funds. There are some advantages to investing in a mutual fund. First, a professional fund manager will do all of the research for the investments in the mutual fund’s portfolio. Second, when you invest in a mutual fund, you’re investing into a variety of things, limiting some of your risk. Third, mutual funds can be more liquid than other investments. Investors can sell their shares back to the fund itself at any time. There are typically fees involved, however. When you decide to visit with a financial advisor, he or she may discuss several different types of mutual funds. There are money market funds, or funds that can only put money into certain, low-risk investments. You can also invest in bond funds and stock funds. You can purchase mutual fund shares through a broker, who will take a commission, or directly from a mutual fund. Annuities Annuities are agreements between an investor and an insurance company. Basically, you pay the insurance company a certain amount with the guarantee that the company will repay you down the line. There are two phases of an annuity purchase. During the first phase, you make payments to an insurer who then invests the money in a variety of ways. During the payout phase, the insurer returns your money plus interest and income investment gain. The insurer pays either in a series of payments over time or in a lump sum. Investors can buy annuities with fixed interest rates, meaning the buyer is guaranteed to earn a fixed rate of interest over the life of the annuity; or an annuity with variable interest rates, meaning your payout will depend on how much you put in and the rate of return on the annuity’s investments. A third annuity product is an indexed annuity, which combines elements of the fixed and variable annuities. Annuity regulations are governed by state insurance commissioners, so you should check with insurance authorities in your state if you have regulatory concerns. Stocks, mutual funds, and annuities are just the tip of the investment iceberg. When you meet with professional investment services in Milwaukee, a financial advisor can explain these and other ways to save for your future.
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