Committing to policies and investments

Here are questions you need to ask before signing away your money.

The success of your investments will directly impact the tipping scale towards your financial security later in life, so it’s important to ask the right questions, says financial advisor Christina Pope. “There is no right or wrong time to ask questions regarding your investments. Whether you’ve been investing for a long time or are just about to begin, ensuring that your investments are in line with your financial goals is crucial.”

Pope recommends asking the following questions:

• What is my current financial status? It’s important to understand where you stand to determine where you are headed. You need to examine your financial status, investment goals and time frame.
• Is this investment in line with my goals? Determine exactly how this product will fulfill your financial needs with time. Does the product increase in value through dividends, interest or capital gains? Is it affected by interest rates, real estate values or market share?
• What is the risk? Different investment policies carry varying levels of risks. It’s important to ensure that your risk tolerance is in tune with your investments. Generally higher returns mean more risk. Determine how much money you stand to lose and how interest rates, the economy and the stock market can affect your investments. If you aren’t comfortable with high risk options, opt for lower-risk investments.
• What are the costs involved? How much are the entry, management and exit fees?
• Will you be able to access your funds? If you need to access your money, would you be able to do so? If so, what are the processes, costs and penalties involved?
• Is the product registered? Ensure that the product is with an authorised financial services provider and a reputable company.
• Do you have any unanswered questions? It’s important that you understand exactly how all of your investments work and ask questions before you commit.