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Find the Best Investment Companies

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by Jim Blankenship Investments and Retirement Planning Expert

All investments come with risks, and a good investment company determines which investment option is right based on your financial situation and goals. Read our guide to research the best investment company for you. We explain what qualifications to look for in a range of company types and services.

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Types of investments

Stocks, bonds and options

Stocks, bonds and options are all types of securities. A security is simply something that shows partial-ownership, equity or a creditor’s relationships with a company or the government. If you buy individual stocks or invest in a mutual fund that includes stocks and bonds, you’re investing in securities. Most investment firms offer securities.

Real estate

You can invest in real estate by purchasing property yourself or by investing money with a real estate investing company. Most of these companies operate Real Estate Investment Trusts (REITs), which work much like a mutual fund in that your money is combined with other investors’ money to make a larger purchase than any of you could make individually. REITs are traded both on the stock market and through private investment companies.

Precious metals

Gold, silver and/or platinum are important parts of some portfolios. If you’re interested in purchasing gold and silver, you can purchase exchange-traded funds (ETFs) or futures, which make it possible to trade precious metals on the New York stock exchange. You can also order coins or bars and keep the metal in your possession. Some investment companies offer certificates, much like bank Certificate of Deposits (CDs), which allow you to own bullion without possessing it.

Hedge funds

Hedge funds are similar to mutual funds in that many investors’ funds are combined and profits and losses are shared among the group. However, these investments use more speculative practices than mutual funds. The SEC and state regulatory agencies do not regulate hedge funds in the same ways they regulate mutual funds, and investors do not have as many legal protections when investing money in hedge funds. Regulatory agencies have issued warnings to investors due to the complexity and significant risk involved in hedge funds.

How to choose an investment company

Qualifications

When someone is giving you investing advice, it is important that you trust them. Many factors can help you determine whether or not the individual advisor or firm is trustworthy.

  • Regulatory registration: Ask whether the investment firm or individual advisor is registered with the Securities Exchange Commission (SEC), Financial Industry Regulatory Authority (FINRA), the Commodity Futures Trading Commission (CFTC) or the regulatory agency in your state. You can check their registration on the SEC, CFTC or FINRA websites. Visit the North American Securities Administrators Association website to find the state organization where an advisor would need to register.
  • Fiduciary or suitability standards: Ask whether your advisor will be bound by fiduciary or suitability standards. Legally, registered investment advisors must either meet fiduciary or suitability standards. Under fiduciary standards, the advisor must advise you to make investments in your overall best interest, while suitability standards only require an advisor to recommend products that are suitable for your current financial portfolio. Following suitability standards, advisors might recommend products that will earn them more money, even if a different product might be best for you.
  • SIPC member: If you’re investing in the stock market, choose a firm or agent that is a member of the Securities Investment Protection Corporation (SIPC). The SIPC insures that consumer assets, up to $500,000, will be protected if the firm goes out of business and investor assets are missing. Note that the SIPC does not protect investors from losses due to market changes.
  • Experience: Not all types of investments or investment advisors are eligible to register with FINRA or the SEC or to be a member of the SIPC. If you’re investing in products not regulated by those organizations, consider how long the investment company of agent has been in business. A long history can indicate how reputable and stable the firm is.
  • Common sense: It’s important to use common sense when investing. If someone offers an investment that seems too good to be true, it probably is. Trust your judgment, and don’t give money to individuals or businesses without thoroughly researching their qualifications and the kind of investments they’re recommending.

Cost

Investment companies make money in a variety of ways. To ensure that you aren’t overpaying for services and to verify that your advisors aren’t recommending products only for their profit, make sure you understand all the fees and costs associated with your account.

  • Account fees: Some accounts charge a fee every month, quarter or year. This fee won’t change based on the number of transactions you make. Instead, it is based on the value of your investment account. The more money you invest, the larger fee you’ll pay.
  • Flat fees: Some companies charge a fee for every transaction. These flat fees are straightforward and generally easy to understand. However, you may end up paying more in flat fees than you would if you paid an account fee. These fees are not based on the amount of money you’re investing.
  • Commission: Some flat fees may be called commissions. Your investment agent may also earn a commission from the company when they sell particular products. Although this practice won’t cost you any money, agents who follow suitability standards may recommend products based on their potential income instead of what is best for you.
  • Seminar fees: Some investment companies only offer advice on how to invest; they do not actually facilitate any investments. These companies or individuals often make money by charging investors to attend a seminar or pay an education fee. You pay for their advice like you’d pay to attend a class.

Philosophy and fit

It is important to find an investment company with agents who understand your goals and are accustomed to working with investors like you.

  • Minimum investments: One of the first questions you should ask is what minimum investment is required. You can’t work with a company that requires a larger investment than you’re willing to make.
  • Proactive recommendations: Ask how and when advisors make changes to your portfolio. Look for a company that will make recommendations before a change instead of being reactive to changes in the market or changes in your financial situation.
  • Investor involvement: Before choosing a firm, think about how involved you want to be in investing. If you just want to deposit money into an account and have someone else do all the investing work, look for a full service company that has professional brokers to assess your financial situation and goals and then make the best investments for you. If you want to be more involved, you can choose a company that offers less professional advice, which may result in lower fees.

Investment company types

Full service

Traditional brokerage firms offer investors a wide variety of services and have professional brokers on staff to advise consumers. Those looking for a comprehensive investment portfolio should choose a full service, traditional investment company.

Focused investment type

Some investment companies focus on a single type of investment, like real estate, bitcoin IRAs or gold IRAs. Consumers who are especially interested in that commodity or are looking to expand their existing portfolio may wish to choose this type of company.

Workshops and seminars

Some investment companies focus on investor education instead of investments. Consumers who want to be very involved in their investments or simply want to learn more should consider attending workshops held by one of these companies.

Investment companies FAQ

What are the four types of investments?
The four main types of investments are:
  • Securities: Stocks, bonds and options that represent a share of ownership, a creditor's relationship or rights to ownership in a company or a loan to a corporation or government entity
  • Real estate: Land, buildings and the natural resources on these properties
  • Precious metals: Usually gold, silver or platinum
  • Hedge funds: Shared alternative investment vehicles with diverse approaches and aggressive management
What does an investment company do?
Investment companies help clients buy, sell and trade assets to increase portfolio values. Full-service investment companies offer a wide variety of portfolio options and guidance, while focused investment companies specialize in certain types of assets, such as real estate or gold IRAs. Other investment companies just focus on education by holding seminars and workshops for investors.
How does an investment firm make money?
It depends on the type of investment company. Brokers make a commission when they execute financial transactions. Advisors are either:
  • Fee-based advisors that charge fees, but also make money off commissions
  • Fee-only advisors that exclusively make money by charging clients

While fee-only advisors might charge you more, their compensation structure helps avoid conflicts of interest. This is why most fiduciary advisors don’t take commissions.

How do you buy shares in a company?
Most investors buy stocks through a broker, whether it’s online or in person. To buy shares in a company, you must:
  1. Open a brokerage account
  2. Add money to your account
  3. Decide what stocks you want to buy
  4. Choose how many shares you’d like
  5. Set up the purchase with your broker

Once you’ve purchased your shares, you need to monitor their value to ensure you sell at the optimal time.

What services do investment companies offer?
Investment companies help clients buy, sell and trade financial assets. These services come in the form of:
  • Meeting with clients to identify their needs
  • Offering advice on transactions and investment strategy
  • Educating clients on the different aspects of investing
  • Processing financial transactions, like buying stocks or real estate
Can you invest in a private company?
Yes, but it’s more difficult and dangerous than investing in a publicly traded company. Private companies have fewer legal requirements than public ones, which means fewer safeguards for investors. If you want to invest in a privately held company, consider joining an investment group with broader interests to minimize your risk.

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    Compare Top Investment Company Reviews

    by Jim Blankenship Investments and Retirement Planning Expert

    Jim Blankenship is a Certified Financial Planner with over 30 years of experience in the financial services industry. He is the founder and principal of Blankenship Financial Planning, Ltd., has earned the Enrolled Agent designation and is a NAPFA-registered financial advisor. Prior to establishing his independent firm, Jim operated a successful tax preparation service and managed information technology operations for a major financial services corporation. Jim is the author of three books and a contributor to the blog, Getting Your Financial Ducks in a Row.

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