Certified Financial Planner
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A certified financial planner has the education and the knowledge to help consumers with insurance, investments, retirement, estate tax, and other types of financial planning. To acquire certification a candidate must have at least a bachelor's degree and must pass a CFP exam. License holders must meet the requirements for continuing education classes to keep their certification. A certified financial planner has to adhere to the ethics set forth by the CFP board and be professionally responsible at all times. She must be able to work well with people and know how to evaluate a client's financial status in order to make recommendations. "I applied mine heart to know, and to search, and to seek out wisdom, and the reason of things, and to know the wickedness of folly, even of foolishness and madness" (Ecclesiastes 7:25). A few of the best investments that may be recommended to a client include a savings account, certificates of deposit (CDs), stocks, bonds, and living on a budget.
One of the safest ways to save money for the future is by having a savings account. A certified financial planner may suggest a savings account if the client wants to be able to have the money saved available to her on short notice. Withdrawing money from a savings account is easy enough and usually can be done the same day the transaction is made. Savings accounts have a fixed interest rate and will probably not require the customer to maintain a minimum balance and can usually be opened with as little as $50. Having a savings account comes in handy when the customer has an emergency and needs cash. A good rule of thumb is for a person to keep at least two months salary in the bank account in case of job loss or other types of emergency situations.
Most people have planned expenditures that they can foresee coming up in the future. A certified financial planner helps a client to set goals on what she would like to have saved despite expenditures that may come up. Some possible expenditures people like to save for include a yearly vacation and a down payment on a house or a car. Planning ahead for these types of expenses will help the client to put a little extra in savings to cover expenditures and still have some left over to keep in the bank. That way there is always money put back that is making interest. The best way to guarantee that there will be some money left in savings is to keep a budget on what can be spent on vacation or decide upon a certain amount that can be put down on a house or a car.
Another choice for a safe investment is a certificate of deposit (CD). A CD should remain untouched for a certain amount of time until it reaches full term. Cashing it in before the full term period will mean paying a penalty. The longer a CD is left untouched the more the return. A certified financial planner would recommend that a client be willing to leave a CD untouched for quite a while to get the biggest return. Since banks give a guarantee on the return of a CD a person can look at the investment as safe. If a client anticipates cashing it in early she should put the money in a savings account instead.
Other investment choices include stocks and bonds. Stocks usually have higher returns than bonds do but they are subject to market volatility and can lose money. A certified financial planner can help an individual make the best choices. Buying stock is purchasing ownership in a company. Investing in a company that has a history of producing earnings is one way to make a sound choice. Bonds are actually loans that investors make to companies and they provide a fixed return to the investor. No matter how much money the company makes the fixed return stays the same. Government bonds are considered safer investments compared to corporate bonds simply because they are insured but corporate bonds often have a higher rate of return than government bonds.
Spending money wisely is something that a certified financial planner will stress with a client. Having too many credit cards is a big risk for future investments simply because in the future there will be interest on the purchases made with credit cards unless the client pays off the balances in full every month. Most people make the minimum monthly payment on credit cards so their purchases are costing them much more than what they originally paid for them. Not using credit cards can give an individual more money for the future. In order to be successful with finances both now and in the future the client will need to learn how to live on a budget and how to make wise decisions about spending money.
Every choice that a person makes that involves money should be talked over with a certified financial planner. This includes what type of insurance to purchase, what investments to make, how to end up paying less on taxes, and what retirement plan to invest in. Someone who has a degree in finances will have the knowledge to help clients to make profitable choices by considering the outcome when spending or investing money. A person would do well to find a certified planner with experience or use someone that a friend or family member recommends.
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