When it comes to finding your financial footing, understanding a few key concepts and terms goes a long way to promoting literacy and inspiring confidence in knowing how to handle one’s money. Let’s take Claire’s story for some perspective, and you might identify with some of her fears.
Claire is wildly successful at work in her creative arts field; however, she feels uncertain and intimidated by certain financial decisions. For years she happily handed off managing a majority of financial details and decisions to her partner, while secretly justifying to herself, “I am the creative one. It is not my area of expertise, so it’s okay, someday I will learn.” Since her divorce, she feels as if she’s scaling a mountain when it comes to who she should hire and trust for guidance. Even now, as she sits around the dinner table with her college-aged children as they talk about financial subjects or other terms, she’s embarrassed that she doesn’t understand what they are discussing. Worse, she finds herself tuning out of the conversation; instead of asking engaging questions, she is losing out on yet another opportunity to learn. When opportunities present themselves, she wonders if they will be good investments for her.
Understanding a few key concepts and terms will help Claire—and you—to feel more self-assured and courageous in making your financial decisions.
Financial Advisory Licenses
If you have a financial advisor in mind, you’ll want to check if they’re licensed. Many cases of investment fraud within the US are perpetrated by those who are unregistered and unlicensed. Know who you’re trusting with your money. The Investment Advisor Public Disclosure website, or IAPD.com, allows you to search for an individual or a firm. Run by the U.S. Securities and Exchange Commission (SEC) and North American Securities Administrators Association (NASSA), visitors can research professional credentials, including brand affiliations, examinations (ex. Series 6, 7, 63, or 65) passed, state licenses, and even complaint information. Conducting your own research from data sources helps firm up your financial footing.
Boost your understanding of key terms, estimator tools, and investment products, including Cryptocurrency, plus more complex information about financial subjects. Visit the SEC-sponsored resource at investor.gov and take a look at some of their resources listed here:
- Free Financial Planning Tools – including a Social Security Estimator Tool
- Introduction to Investing – read about investment product types (REIT, EFTs)
- Crypto Assets or Buying Crypto or Token
- Use Caution With Celebrity Endorsements (video) – while not TikTok level fun – sage guidance for all social media consumers
- Introduction to 529 Plans for education expenses
Perhaps you’ve heard the term accredited investors and are unsure exactly what they are or whether or not you need one. According to the online, commission-free investing portal Robinhood.com, these can be either entities or individual investors that meet certain criteria set by the Securities and Exchange Commission (SEC). These requirements gain them access to certain restricted investment opportunities you wouldn’t have access to otherwise. While requirements are necessary to become an accredited investor, there is no formal or specific process that gains this favored status.
These requirements are kind of like a backstage pass to the most sought-after performers or shows. The concert is open to anyone with a ticket; however, those holding these special passes are allowed to go backstage, wander restricted areas, and schmooze. All you Taylor Swift and Beyonce ticket holders know that amazing feeling. In order to qualify for an accredited investor, a single individual’s or a married couple’s net worth must exceed $1 million, which does not include your primary residence. So as an accredited investor, you can access opportunities for more wealthy and/or sophisticated investors.
Know Your Financial Opportunities
Completing research, thoughtful due diligence of potential financial partners, and a dose of persistence, Claire is now confidently navigating her financial world. Before long, she began engaging in lively financial conversations with her children, continuing to learn and bolster her knowledge. She more confidently makes decisions that align with her goals and desires. By taking the time to do the work, Claire is no longer dangling by a thread. In fact, she created a strength within her she never knew existed.
At Organized Instincts, our seasoned team of daily money managers will help you find and secure your footing one step at a time. Schedule a conversation today and learn how our team nurtures your financial literacy journey so you successfully summit the mountain.