Best Financial Advisors in Westminster

Frequently Asked Questions

• Introduction

  There are many titles for financial professionals, so it's challenging to track what each one means. A financial advisor is probably the term you've heard most often. Financial advisor is a broad term for a professional who helps individuals or companies manage their finances, including investment choices. There are over 100 certifications that financial advisors can obtain.
  

  • Financial planners, wealth managers, and investment advisors are all financial advisors with different focus areas.
  • A financial planner helps an individual or a company make a plan to achieve long-term financial goals.
  • A wealth manager helps individuals maintain their wealth through various disciplines and services, such as taxes, estate planning, and investment advice.
  • An investment advisor offers investment advice and recommendations to individuals or organizations.
    

  There’s a misconception that you have to be extremely wealthy to use a financial advisor. In reality, they can be beneficial for people from any income level. Keep reading to find answers to the most commonly asked questions about financial advisors, so you know which type can fit your specific needs.
  

• Is there a way for Westminster residents to safeguard their assets from lawsuits?

  It is ideal for Westminster individuals to get umbrella liability insurance if their assets rapidly appreciate or they have high-risk activities. An umbrella liability insurance is a policy that protects people against personal injury and property damage lawsuits on top of their automobile or homeowner's insurance policy. It usually covers defense costs, but those are often included in the whole policy's limit.

• When is the right time for Westminster residents to purchase long-term care insurance?

  The best time to purchase long-term insurance in Westminster is when people are still healthy and young. Oftentimes, the premiums are already more expensive when they postpone their decision or they are already disqualified from the coverage. The ideal age to start looking into long-term insurance is under 45 to 55 years old since individuals can start paying premiums during their income-producing years.

• What specific challenges or drawbacks might Westminster employees encounter when investing in a 401(k) plan?

  401(k)s are good investment tools to prepare employees in Westminster for retirement. However, those who want to maximize their contributions cannot go beyond the capped amount per year. Additionally, 401(k)s are not ideal for non-retirement goals, such as an emergency fund, because there is a 10% penalty when an account holder withdraws money before 59 and a half years old. Lastly, just like any other investment, the money will incur income taxes upon withdrawal.

• Which of the two, mutual funds or ETFs, is the more favorable investment choice for Westminster residents?

  While both mutual funds and exchange-traded funds (ETFs) are good vehicles for investment in Westminster, ETFs have an advantage when it comes to taxes. Even though both are subject to taxation of dividend income and capital gains tax, ETFs are designed in a way that minimizes taxes for the account holder, resulting in a lower tax bill than the investor would have paid with a mutual fund of a similar structure.

• What methods can individuals in Westminster use to assess their risk tolerance when making investment decisions?

  Investors in Westminster must first assess their age and income since those factors are correlated with the level of risk they can accept. From there, they need to identify their financial goals, whether their investments are for wealth preservation, growth, or retirement. Investors should also know their time horizon and foresee when they will need the money. Lastly, they should seek guidance from a financial advisor who can help reveal their risk tolerance and create strategies around it.

• Are financial advisors worth it?

  Whether or not a financial advisor is worth it depends on your personal situation. If your finances are fairly straightforward, then you may be better off handling it on your own. But if you have substantial assets or a complex investment portfolio, then hiring someone to handle it for you can be well worth the cost.