Many of us want to start investing, or improve our current investment strategy, but don’t know where to start. Here are four steps that I think will help you get started on your path to becoming a more savvy investor:

How should you choose a financial professional?

First and foremost it’s very important to use a licensed financial advisor. This will help ensure that you receive the appropriate advice that you should be given, as well it gives the client a legal outlet for any complaints a client may have.

Plan Ahead

Before you meet with an investment advisor, broker, or other investment professional, it’s a good idea to map out your financial goals. Using an expert will help you decide how to invest your savings, but you should first have a firm handle of your short and long-term goals and needs. How much income you will need to supplement your existing Social Security or other pension fund to meet fixed expenses? Do you have children or grandchildren to marry off? Are your elderly parents in need of care? You need to determine your own budget needs and your ability to tolerate risk first, and then ask your advisor what kinds of investments would best fulfill these goals. Use your advisor as a sounding board. The advisor can tell you if your goals are realistic, and if not, you can work together to come up with goals that can be achieved. Then you should take the time to understand the various investment products you may be considering. If you receive a lump sum pension payment or an early retirement payout, you may feel pressure to invest it quickly in order to avoid adverse tax consequences. Intelligent investing requires careful consideration. If you need time to fully explore your options, put the funds in a short-term deposit and then invest once you feel ready to do so. Otherwise, you may be susceptible to high-pressure sales tactics of those who will “take care of your problems for you.” A quick fix is not the answer in this situation. Your money is too important to lose!

Understand your investment

Focus on the whole range of the investment’s characteristics in your decision-making, not simply on promises of a high return. Before you purchase an investment, you should understand the cost, degree and nature of the risks, investment goals, performance history, and any special fees associated with the investment. Never assume that your investment is federally insured, low risk, or guaranteed to deliver a certain return. Make sure you understand the information you are given. Once you have that information, check it against your own goals and risk profile to see if the recommended type of investment is a good fit.

Check Account Statements

Be sure you understand your account statements. Your account statement should reflect only the pattern of investing that you have authorized. If there is a discrepancy, raise the problem immediately with your broker and, if necessary, the branch manger who supervises the broker. If there is something that you don’t understand (for example: an unfamiliar term or abbreviation) that appears on your statement, don’t hesitate to ask your advisor. If an investment professional is unwilling to take the time to answer your questions he may not be someone with whom you want to handle your life savings. The account statement is your primary tool as an investor for policing your investments, so make sure to take full advantage of it. Continued cooperation with your financial advisor will ensure that your investments remain consistent with your goals. It is important to review your portfolio with him periodically, and make sure that it is still consistent with your needs. On the same note, make sure that your investment strategy remains current. If there is a change to your financial situation, consider whether your strategy needs to be reevaluated. With smart planning and continued monitoring of your investments’ progress, you and your financial advisor should have a valuable, long-lasting relationship.