For Beginners
Q: Who can I trust to help me with my finances?
A: Someone with experience and credentials is a good start but not the final answer. Shop around, interview, and find a person that will listen and not just talk. Good planning requires many steps to arrive at comprehensive plan. Listen to friends whose opinion you respect and trust your own instincts. Ask questions and change advisors if you lose confidence in that advisor.
Q: What is a CFP?
A: A CERTIFIED FINANCIAL PLANNER (a certification designation) represents practitioners who have taken the extra step to demonstrate their professionalism by voluntarily submitting to the rigorous CFP certification process. In addition to significant education and experience requirements, they must pass a comprehensive exam that tests their personal financial planning knowledge and skills, continually update their abilities and abide by a strict Code of Ethics.
Q: What are the requirements to be called a Financial Planner?
A: There are no established criteria.
Q: What is a "FAQ"?
A: A FAQ is a "Frequently Asked Question."
Insurance
Q: Is life insurance necessary?
A: Only maybe, the question is “Is there someone or some thing I need to protect?” If someone needs the income protection you now provide, then life insurance may be a good idea. They should use no more than 5% of the policy benefit per year. Divide the needed annual dollars by 5% to arrive at the size of the needed policy.
Retirement
Q: Can I retire rich?
A: It is possible. First what do you consider to be rich? If your income is going to be more than you spend, perhaps you are there. On the other hand, $10,000,000 by some standards is when you might be considered rich. From one to 10 million is more do-able if you start early and are conscientious about savings and are frugal.
Q: How much will I need in retirement?
A: How much you need is directly proportional to how much you spend. Project your spending habits and desired life style, factor in as best you can the contingencies that may affect your world and provide for them. An example might be insurance. Then look at your resources by projecting retirement plans, Social Security, a part time job, savings etc. When the projected resources exceed the projected needs, you are there. When computing resources, plan to use no more than 5% annually of the invested funds principal that you have available. Don’t forget about income taxes and inflation.
