Should I Use the Investment Services at My Bank?

investing through bank financial services
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Many banks offer investments services to their customers in addition to other banking services offered. These in-house investment services can primarily be targeted at high-wealth individuals. But if you are just starting to invest, your bank may not contact you to offer these services, but they may be available to you.

So what are these investment services, exactly? The services offered are similar to the role of a financial planner or adviser. Depending on your accounts, and the bank’s policies, you may pay an hourly rate for these services.

However, some financial advisers work on commission, so be sure to take that into consideration when they recommend products and services to you. Worth noting: Your bank may also offer these services to you without a fee, which means that the financial planner isn’t working on commission.

Are the Investments Services Covered by the FDIC?

The investment services offered through your bank are not insured through the FDIC. The FDIC only guarantees deposit accounts you have through the bank, because the stock market can change, they will not guarantee the money.

But this doesn’t mean you shouldn’t use your bank to invest Remember, your money is not guaranteed when you invest it, regardless of what investment firm you use, since the stock market varies, and can go up or down.

When investing, especially through your bank, it’s important to be aware that the accounts are not guaranteed by the FDIC. Yet, it’s important to invest your money instead of just keeping it in a savings account so it can grow (or even just keep up with inflation).

How Do the Investment Services Work?

The investment services through your bank should be comparable to the investment services you would receive through an investment firm.

The key is finding a financial planner or adviser you are comfortable working with. Your financial adviser should be willing to answer any questions you have about the products you are purchasing. If he is unwilling to explain the products and how it fits into your overall investment plan, you should consider choosing another adviser.

How Do I Choose the Right Investment Service and Financial Planner?

Finding a financial planner is an important process, and you should look at several different candidates before choosing the right one for you. Additionally, you may want to find out the policy if your financial planner changes companies.

Will you go with him or will your account be assigned to a different planner? And if you want to stay with the firm will you be able to choose your new planner or will you be stuck with someone they assign to you? These are all important questions to ask.

Putting it simply, a financial planner is someone you can turn to for investment advice, and consistency is an important part of managing your money.

When you are looking for a financial planner, ask your friends and co-workers for recommendations, ask about services offered through your bank, interview the planners, and then make your decision. While you should not choose your financial planner just because he works at your bank, you should not rule that option out completely, either.

Learn About Stock Market Basics First

If you know nothing about investing or the stock market, it is best to get advice from a financial planner who understands the markets and products available. Once you are more comfortable you may want to purchase stocks online through your own brokerage account.

But keep a few things in mind if you decide to go out on your own. Mutual funds reduce your investment risk because it spreads the risk over several different companies instead of just one. Any individual stocks you purchase have a greater risk because if the company fails the stocks can become almost worthless very quickly, which can be devastating to your portfolio. In short, be sure you are ready to invest before you jump in.

Another investing tip? You likely pay more interest on credit card debt than you would earn from investing. This means you should pay off your consumer debt completely before you invest.

The money you invest should be money that you do not need to live or to pay for an upcoming big expense. You should not be dipping into your savings each month if you are investing, and you should make sure your budget allows enough wiggle room to protect your savings and investment accounts.

Updated by Rachel Morgan Cautero.