Literally thousands of investment options are available to you, and the huge variety of options can be very confusing. Three of the important concepts you should be familiar with, even if you decide to get advice from a financial advisor, include:

• Rate of return. The profit realized relative to the initial cost of certain investments is called the rate of return and is usually expressed as a percentage of the initial investment. For example, if a savings account pays 4 percent interest, the rate of return is 4 percent. Always consider the potential return on an investment in relation to the length of time you plan to have the money invested, taking into account, of course, your tolerance for risk.
• Accessibility. Some investments have restrictions on when you can access the money you’ve invested. For example, if you invest in Certificates of Deposit (CDs), you may lose a specified amount of interest (e.g., 90 days interest) if you take your money out before the certificate comes due. Make sure you know how and when you can access your money, and under what conditions you may incur penalties.
• Taxes. You need to consider the tax consequences of all investments, but consider long-term deferred investments especially carefully. Investments such as deferred annuities, for example, may allow you to defer income tax, but may also have withdrawal restrictions and tax penalties associated with early withdrawals. The best advice is to talk to a tax professional or financial advisor before investing; make sure you know what your tax liability will be before the taxes come due.