Shouldn’t this be the same for your investment broker?

Whatever security in which you invest, it is important to know who your investment broker is. Knowing your investment is in the right hands goes a long way in ensuring the security of your investment. This means more than knowing your broker’s name and favorite sports team. As an investor, you have to know that the person handling your finances and assets is trustworthy enough to have that responsibility. Investments already assume enough risk. You should not have to worry about your investment broker.

Vetting Your Broker

There are some important things you need to consider before choosing a broker that is right for you. This requires doing some background research on potential candidates beforehand. Investors should know a broker’s:

• Disciplinary history
• Reasons for departure from other firms
• Professional conduct
• Personal financial health

Fortunately, there are tools available to investors that make this very easy. The Financial Industry Regulatory Authority (FINRA) has a great website, BrokerCheck, that searches their extensive database of registered individual brokers and firms. FINRA’s database looks into several key aspects of a broker’s background and experience to provide investors with a comprehensive view of broker competency and professional ethics.

Who, What, When, Where, Why… and How

Your broker should be able to answer these basic questions about their performance and employment history. If a potential investment broker seems unwilling or unable to answer these simple question, they are probably not a good fit. Don’t put an added risk on your investment. Put your financial future in the hands of a broker you can trust.

The Federal Reserve has decided to leave interest rates alone for the foreseeable future, according to a report from Reuters. Despite the fact that a target rate-hike was announced last December, the Fed has deferred any increases as part of a long-term plan to reignite the U.S. economy. President of the Minneapolis Federal Reserve, Neel Kashkari, stated that “the U.S. economy has room to grow before it overheats”. Economists have been speculating when the Fed will introduce a new rate increase as recent figures show the economy on a steady, upward growth. National unemployment is currently at 4.9 percent, which many economists agree is a sign of a stabilized economy. They also say that soft inflation rates are beginning to show signs of hardening. The Fed plans to keep interest rates unchanged as a cushion against a possible slowing global economy and in the event of any destabilizing events in the global market.

Aren’t low interest rates a good thing?

Yes and no. Low interest rates encourage consumers to borrow and invest back into the economy. They also insulate an economy against unforeseen financial events. Low interest rates make investing safer, but they limit returns on investments due to such a low annual accumulation of interest. Long-term investments, like bonds, bear incredibly low yields. Low interest rates also push up inflation rates, or the cost of goods and services.

Further Economic Cushioning

On a related note, Reuters reports that Federal Reserve Chair Janet Yellen announced this week that the Fed is considering a change to their annual stress tests, or how the overall economy and U.S. securities will fare in the event of a global financial crisis. Without going into specific commentary on the state of the U.S. economy, the Fed char described a more “risk-sensitive, firm-specific buffer”.