Which financial products are right for me?

Sun, Jan 22, 2012

Financial Advice

Financial products are simply instruments offered by the financial services industry that help you save or invest your money. There is such a wide variety of financial products to choose from that it can be difficult to know which ones you should purchase. Here are a few tips on selecting certain financial products to suit your individual needs.

Credit Cards

When shopping around for a credit card, first consider how you`ll be using it. Only use credit cards that match your lifestyle. For example, if you won`t be able to pay your full balance every month, then choose a credit card with low interest rates.

Frequent travelers should consider a credit card affiliated with hotel rewards or airline frequent flyer rewards. If you`ll mainly be using the card to purchase groceries or gas, then look for a credit card that gives cash back or bonus awards for those everyday purchases.

Savings Products

Several financial products exist that are specifically designed to help you earn money as you save money. Savings accounts, money market funds and certificates of deposit, or CDs, are all low-risk ways for you to earn a little extra money back. These products typically offer very low interest rates, however.

If you can leave your money alone for a while, consider investing in a fixed annuity or an equity-indexed annuity instead. These financial products are long-term savings plans that can earn you some extra income if the stocks do well. They also offer a guaranteed crediting rating just in case the stock prices fall or remain the same.

Investment Products

The financial industry offers consumers a variety of investment products. Keep in mind that investment financial products can earn you more than savings products but they also come with a greater potential risk of financial loss.

If you are a low-risk kind of person, look into treasury bonds. The U.S. Treasury Department guarantees that you`ll receive your investment money back along with interest payments, but you have to hold the bonds until their maturity dates. Cashing in these bonds early will cost you.

Stocks have the potential of earning you a much higher return on your investment but there is also a greater risk that you`ll lose your initial funds. When you make an investment in mutual funds, your money is placed with that of other investors. A professional money manager carefully selects where to invest the group`s money. This might be an ideal financial product for you if you have limited funds, knowledge or time. Keep in mind that even with a professional money manager, you still run the risk of financial loss if the stock market takes a dive.

Before selecting any kind of financial product, you should first determine your financial goals. Will you need to be able to access any funds you invest within the next several years? Will you be able to leave investment funds alone for a longer time, such as over ten years? Research all types of financial products carefully before making a purchase. Fortunately, Moneysupermarket has online tools to help you compare different financial products and determine which products are right for you.

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One Response to “Which financial products are right for me?”

  1. Clipgurus Says:

    It is easy to drown in the sea of financial instrument options, so what I like to do before making the final decision about my next investment move is to consult with my financial planner to scan all the aspects of the next step. Hope it serves as well for you as it did for me.

    Reply

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