Resources: Working with a Financial Professional
Financial professionals are typically viewed as people who can help identify ways for your family to save for college or retirement. But they can be so much more. By discussing everything from savings plans and risk tolerance to long-term tax and estate planning, your investment professional becomes a trusted personal guide. This relationship should be cultivated over time.
The first step in working with a financial professional is identifying your financial goals. Next, you'll develop an investment strategy. This plan reflects many aspects of your life. It includes an investment portfolio that measures your risk tolerance and return expectations. Together, you should reassess your financial needs on a regular basis. Then adjust your portfolio based on market conditions - and your life.
In short, financial professionals will customize an investment strategy that fits your needs. Some plans are very specialized. Others are complete financial solutions. A financial professional may even recommend the services of other professionals such as accountants or attorneys.
Another common perception is that you must be rich to use a financial professional. However, most people will benefit from the advice of a financial planner, no matter what their income.
To achieve your investment goals, your financial professional has an entire suite of solutions on hand:
- Investment planning: It's never too soon to meet with a financial professional. He or
she can help you develop financial life goals, review them
periodically, and select or allocate your investments.
- Education savings: With
education costs skyrocketing, we believe it's more important than ever
to create a college savings plan. Tuition, books and housing can cost
tens of thousands of dollars annually. Luckily, there are several
investment plans available to make saving for college easier. For many
people the most popular choice is the 529 plan, which can offer several
tax incentives for parents or family friends. There are other plans
available, including the Coverdell Education Savings Account, Roth IRA,
and more.
- Tax strategies: Investors have abundant choices when seeking tax advantages. 401(k)
plans for retirement, 529 plans for education, and tax-free municipal
bond funds are well-known vehicles. But there are several other
investments that offer significant tax advantages as well, such as
reinvesting mutual fund dividends or rolling over an IRA. A financial
professional can help you devise a strategy to help lower your tax
burden.
- Retirement planning:
Learning the retirement alphabet is a challenge for many adults. IRA,
GSRA, RRSP, SERP... these are just some of the investment options
available for retirees. Saving early and devising a retirement strategy
are important as you approach your golden years. Even then, more
planning is essential as your assets are distributed to you from the
various retirement plans to make sure your nest egg can last.
- Estate planning: Perhaps
the most overlooked area of your financial future is estate
planning. The tax liabilities for heirs can be severe and they may be
more burdensome without seeking the advice of a financial professional.
Understanding the various laws that affect your estate is essential
when drawing up a will.
To obtain a prospectus, order online or call Customer Service at 1.800.222.5852
While this communication may be used to promote or market a transaction or an idea that is discussed in the publication, it is intended to provide general information about the subject matter covered and is provided with the understanding that The Principal® is not rendering legal, accounting, or tax advice. It is not a marketed opinion and may not be used to avoid penalties under the Internal Revenue Code. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements. For more information about our funds, including their full names, please see the Principal Funds, Inc. prospectus or call Customer Service at 1.800.222.5852.
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