Investment Planning and the Importance of a Financial Advisor


Investment Planning and the Importance of a Financial Advisor

investment_planningInvestment planning may be best provided by a financial advisor familiar with the investment options available to you. The form that your investments will take will be dependent upon your personal needs, and the purpose of the investment. For example, are you investing for quick profit and therefore need to take a degree of risk, or would you be better off opting for an investment such as mutual funds?

Maybe you are planning for the future in a more specific way, and are investing for your retirement. A financial advisor can help you to choose the most appropriate type of investment to meet your financial situation, and also help you with estate and retirement planning and how investment can play a part in that.

However, prior to considering using the services of a financial advisor, it is important that you have some understanding of the types of investment available in terms of tax reduction strategies. For example, what is the difference between a traditional tax-deductible 401(K) IRA (Individual Retirement Account) and a Roth IRA? Is your investment tax deductible, or a qualified program that has been funded by pre-tax dollars?

Here is an explanation of some of these terms, so that if you take the advice of a financial advisor, you will understand what he or she is talking about:

Traditional 401(K) Plan

A traditional 401(K) is a tax deferred retirement plan offered by employers to employees, who may make their payments from their salaries before the salary is taxed. You then pay tax on your retirement funds when you withdraw them. The employers may make matching tax deferred contributions and also profit-sharing payments to the plan. Generally, withdrawals cannot be made from a 401(K) plan prior to retirement age without a financial penalty being applied. There is also a limit to the proportion of salary that can be paid into a 401(K). Because payments are made pre-tax, the payouts will be subject to tax

A defined contribution plan involves a defined sum paid into the plan each month by the employee and employer, and the payments on retirement will depend upon the value of the accrued sum at retirement age. A defined benefit plan offers a specific sum to the employee on retirement based upon their length of service and earnings.

Roth IRA

The Roth IRA is a retirement savings vehicle, where payments are made after tax. This enables the investments to grow without accruing tax, and you have no tax to pay when you take the money out when you retire, assuming you meet certain conditions.


Your IRA funds can be invested in any way you choose them to be, and if you purchase a fixed annuity you can maintain your tax deferral by withdrawing your IRA funds and purchasing a fixed individual retirement annuity within 60 days, or you can directly rollover your IRA funds to an annuity.

The annuity can give you a lump sum and then a monthly payment for life. The tax situation can be complex, and a financial advisor will be able to look after all of this for you to make the best possibly use of tax free allowances and your tax deferrals.

Mutual Funds

Mutual funds are an investment vehicle where large numbers of investor's money is pooled to purchase a range of investments that can be a mixture of stocks, bonds, gold and currency and any other commodity considered worthy of investment. At the end of daily trading, the total value of the mutual fund is divided by the total number of shares to determine the value of each individual share.

Mutual funds are 'managed' funds, being run by professional brokers and managers, so there is a fee involved. IRA assets can be used to purchase shares in mutual funds and enable your investments to potentially grow without the risks typically associated with individual stock purchases.

Times are still uncertain, and irrespective of how much you feel able to look after your own investment yourself, particularly your investment for retirement, you are well advised to take the advice of a financial advisor to make sure that you are making the most appropriate use of the cash at your disposal and also your monthly payments in a 401(K) or a Roth IRA - the choice of a tax deductible or tax deferred can be critical and your financial advisor can help you choose from the best qualified programs available for your goals and objectives.

Your Financial Well-Being is Our Mission and Vision

Contact us now for a no obligation consultation.

How can we help you?
Contact Information
Address 1
Address 2
What is the best time to contact you?

For Faster Financial Advice... Call us now!


As a Financial Adviser with Eagle Strategies LLC, a Registered Investment Adviser, I can provide you with a plan to help you achieve your financial goals.

Call Now!