Financial Intelligence (knowledge and skills gained from understanding finance and accounting principles) is the edge we all need to give us the flexibility to not only survive; but thrive, in the chaos of our current economic climate. Although you don’t need to be an expert in everything related to financial principles and accounting, you do need to know how to balance your investment portfolio, how to choose your investments, and how to find help and support when you need it. The following four principles may be helpful if you aren’t sure where to start your learning process.

Hire the Right Advisor for your Investments All Financial Services professionals, including me, have assets they favor for their investments. It wouldn’t be wise to assume that a Financial Services professional would be equally familiar with stocks, bonds, life insurance, real estate, precious minerals, franchises and other business opportunities. These are all specializations requiring more in-depth knowledge and experience.

If a Financial Services professional is doing a good job of helping you structure your overall asset mix, you shouldn’t be able to tell which types of assets they prefer to invest in. They should be guiding you through the process of creating the financial strategy that fits you and your family, both now and in the future.

You may want to consider getting help for your overall investment strategy from a Financial Services professional who is not compensated based on commission sales of investment products, in order to ensure that your investment portfolio includes the flexibility you need to weather economic storms. You can then hire separate advisors for each type of investment you are adding to your portfolio that you feel you need specialized help with.

Balance Your Investment Portfolio
In order to provide maximum flexibility, your investment portfolio should be both vertically and horizontally diversified. This will allow you to easily adapt to changes in the economy and changes in tax law. When I use the term “investment portfolio”, I’m not referring to a stock and/or bond portfolio or an IRA/401K portfolio, I’m talking about the full collection of your investment assets.

If all of your investments are of the same type and risk level, your investments are not vertically diversified. If all of your investments are held in pre-tax assets, such as IRAs, 401Ks, or other retirement accounts; your investments are not horizontally diversified.

Include Compensation structure in your Investment Cost
Getting help from a Financial Services professional will always have a cost: The cost may be paid strictly for service, or may be based on commission for the sale of an investment product.

This is important information for consumers of financial products, in order for these costs to be included in the cost of ownership for those products and make comparisons between alternatives. There may also be costs for the sale of investment products that should be included in the cost of the investment.

Understand your Investments Ensure you fully understand each new investment you plan to make, through research and evaluating alternatives, before you make your final decision. Don’t rush into any investment decision without creating a comfort level with that specific type of investment. Ask whatever questions you need to establish that comfort level.

Many investment assets have purchase or setup costs front-loaded. This means that if you purchase something and then change your mind, you may have already incurred some costs that cannot be easily recaptured from the new investment.

The people you choose to rely on for a specific type of investment opportunity should be answering your questions and helping you to evaluate alternatives.

As a final thought: Investing in your own education and being involved with each of your investments not only saves you money, it gives you a higher sense of control and the ability to respond to changes in the economy much more rapidly. All of that is a good thing during times of high economic change. Remember that there will never be anyone who cares about your financial future more than you do!

I would like to invite you to claim your FREE Instant Access to my introductory video series entitled “Take Control of Your Financial Destiny” at http://Abundance-by-Design.com. This series provides additional information on these topics and others, that will help you begin to develop Financial Intelligence.

Tags: Financial Intelligence, Financial Management, Financial Services Professional, Investment Portfolio, Investments