Young Investors - FAQ

Beginning to think of your financial future at a young age is a smart decision. Too many young people delay their investment planning and don't secure their financial freedom early on. As an independent broker dealer, SII Investments understands the uncertainty and apprehension that many young people face as they explore how to start investing. Please review these frequently asked questions that many young investors face as they start investing, and contact the investment professionals at SII Investments if you have any further questions regarding your financial planning needs.

What are the options for investing?

There are a variety of investment options, especially for young investors. Here is a brief summary of some of the most popular types of investment options. Talk to your financial advisor about each of these investment types and how they should be used for your financial goals.

  • Bonds - act as a loan you provide to the company, city or government that issues the bond, and they promise to pay you back in full with interest after a duration of time. There are numerous types of bonds available, including savings bonds, treasury notes, corporate bonds and more.
  • CDs - (certificates of deposits) are savings tools offered through banks and credit unions and are typically offered with specific time periods instituted (with early withdrawal fees). Normally, CDs offer higher earnings than traditional savings accounts and include traditional, bump-up and liquid cds, among others.
  • Mutual Funds - are made up of diverse investments in stocks, bonds and cash. Mutual funds are professionally managed and include money market funds, stock funds and target date funds to name a few.
  • Stocks - buy investors a piece of ownership in a corporation and act as a representation of a claim on a piece of that company's resources and incomes. There are two main types of stocks (common and preferred) and a variety of classes of stocks as well.

Should I work with an investment professional?

With so many tools and resources available to young investors today, it may seem tempting to begin building an investment portfolio on you own. As an independent broker–dealer, we feel that our registered representatives are a powerful resource for new investors. There is so much to consider before you start investing. Though there are no guarantees in the investment industry, our representatives have experience and specialized educations that qualify them to help young investors strategize and execute smart investment strategies to help meet both short term and long term financial goals.

How do I choose which financial advisor to work with?

Choosing the right financial advisor is an important step as you begin your financial planning. Working with a certified financial planner (CFP) who is licensed, regulated and committed to continuing education classes should be at the top of your list of things to look for. When meeting with potential financial advisors, treat the meeting as if it were an interview, and you're in the hiring seat. Ask yourself or your potential financial advisor these questions:

  • What is the fee structure, and how do they charge for their services?
  • What licenses and credentials do they have?
  • What types of clients do they specialize in? Are they experienced in working with new investors, like you?
  • What services do they or their firm provide? If you're interested in learning about your retirement planning options, or want information on real estate investments, can they adequately advise and support you?
  • What is their investment approach? Did they explain their overall strategies and code of ethics?
  • How often do they speak with their current clients? Are they hands-on enough for you, or will they be too over-bearing for your needs?
  • Are they interested in getting to know you, as an investor and as a person? Did they ask questions about your financial goals, your life, financial situation, investment goals and long term plans?

Do I need a lot of money to start investing?

Too often, we hear people claim that they don't have enough money to start investing. While it's true you need money to start investing, you may not need as much as you think. Even though you might not have a large sum of money saved up yet, beginning your investment steps at a young age is a smart decision. If you wait until you think you have enough saved up, you may never get started. It's important that you understand your options, and work with what you have. There are investment options out there at all price points, and it's imperative that you start now.

  • A CD may be a great first step: you can invest a lower amount, earn more interest than you would in a savings account, and not be tempted to spend it early (thanks to the early withdrawal fees).
  • Put yourself on an investment budget, and start saving more money that is earmarked for your investment strategy.
  • Look into your employer's retirement plan matching policy, and make sure that you're investing at least enough to get the full match.

For more information on how to start investing, or if you have any further questions that have gone unanswered, please contact SII Investments today.