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“It’s not what you look at that matters, it’s what you see.” -- Henry David Thoreau

A colleague and I were talking about how it might feel to work with a financial advisor. Realistically we decided that this experience could be viewed in several ways. Some may view it as a positive and constructive experience, while others could find it frightening or even painful.

Personally, I think it’s exciting, but I expect my doctor, dentist and CPA to be enthusiastic about what they do too. Just like going to the dentist or the car wash, the results are always worth it (clean teeth, shiny car…) but it wouldn’t be the first thing on my “to do” list.

There are times in our lives when events do merit the attention of a financial professional.

Here’s a list of occurrences that may suggest a need for “professional help”:

-- Any change in marital or family status, including health.

-- A death, inheritance of money, property or both.

-- Buying, selling or paying off a house or other significant debt.

-- Changing jobs, deciding on a retirement date or receiving a bonus, starting or selling a business or selling a significant asset.

It’s helpful to understand a few financial and investment basics. Here’s a quick true/false quiz to establish insight into these basics.

1. Before investing you should be prepared for emergencies. True or False

2. Wait for the “right time” in the market to invest. True or False

3. Your investment goals should be based on making the largest amount of money in the shortest amount of time. True or False

4. To yield the best results over the long term, it’s best to concentrate your portfolio on one type of investment. True or False

5. An efficient way to achieve diversification is to buy a mix of stocks, bonds and money market securities. True or False

6. It’s important to base your investments on the appropriate time horizon needed to meet your specific goals. True or False

7. Investors can optimize the likelihood of financial success if they create and follow a plan. True or False

Here are the answers and the reasoning behind them:

1. TRUE. It’s important to determine personal savings and insurance needs before investing. Set aside an amount equal to three to six months’ expenses. Provide adequate insurance coverage, particularly disability and life insurance.

2. FALSE. The best time to invest is the present. The cost of waiting to invest until the right moment can potentially be great. The time to invest is now; waiting to invest means you forfeit the potential of compounding.

3. FALSE. Making a large amount of money in a short amount of time isn’t a realistic or practical investment goal. If you answered “true,” you’re not alone. High market returns in the mid- to late- 1990s increased many investors’ short-term expectations. Past performance is no guarantee of future results. Investing involves risk and you may incur a profit or a loss.

If you base your investment strategy solely on maximizing your returns as quickly as possible and timing the market “just right” to buy or sell your investments, you may take on undue risk. A long-term investment strategy based on achieving realistic, specific goals has historically offered the most sensible earning potential with the least amount of risk.

While returns may fluctuate widely from year to year, historically, the longer you invest, the lower your risk since the range of returns narrows. Past performance is no guarantee of future results. Stocks and bonds are not guaranteed and stocks have traditionally been more volatile than other asset classes.

4. FALSE. There’s greater potential to offset risks if you balance stock, bond and money market securities. This strategy is known as diversification. Because different asset classes perform differently in similar economic conditions, sensible diversification allocates assets across a variety of investments. Diversification can often help offset risks. The process of dividing your portfolio into different asset classes is known as “asset allocation” and the desired result is stability — when one portion of your portfolio experiences losses, the other portion may experience gains. However, diversification does not ensure a profit or protect against a loss in a declining market, as all securities are subject to market risk.

5. TRUE. This is an efficient way to achieve diversification. Look to diversify for varying objectives — such as growth, income or capital preservation. Create a broadly diversified portfolio that balances risk and return.

6. TRUE. In fact, some investments are more appropriate for certain time horizons than others. Risk can be managed by investing in different asset classes to meet different time horizons. Short-term horizons — invest in stable assets; Long-term horizons — invest in more aggressive assets. Monitor your progress and reallocate as necessary

7. TRUE. Without question, financial success is likely more attainable with a realistic, step-by-step plan based on specific goals.

Most of this is common sense. So why don’t more people invest according to these principles? Because to implement these concepts and stick to them for the long haul is difficult part and takes discipline. Emotions and human nature make it challenging to stick to the basic concepts.

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Darcie Guerin is a financial adviser and branch manager at Raymond James & Associates Inc. at 606 Bald Eagle Drive, suite 401, Marco Island. Contact her at Darcie.Guerin@raymondjames.com, 389-1041 or toll-free (866) 343-0882.