You’re in that divorce recovery place — post-settlement, but still navigating your newly found independence, when the invitation arrives, by old-school snail mail, e-mail, or text. You’re excited, you’re invited to a cocktail party!

You start thinking about how much fun you will have, or what the might night hold … the party’s unusual location … who you will meet … and the dress you might wear, or what you might “have to buy”.

It’s natural that when the evening comes you’re a little nervous. You’ve not been out a lot by your single self. No matter, you take a breath. You are ready to enjoy the festivities, the music, the people. Things get rolling after you arrive and you’re into your fun evening with friends and new friends. You’re chatting about happenings around town, where to go on your next vacation maybe, or a new restaurant serving quinoa in a new and novel way. There’s talk about the latest must read novel, gotta see movie or Broadway show when it happens. Someone starts talking about an unusual investment opportunity.

Money talk is the last thing you expect to be talking about, or even listening to, but there you are. Face to face with someone you’ve never met who has introduced himself and who seemingly can’t stop talking about a “can’t miss” investment. He’s suggesting you should get in on the ground floor and ride it to the top. You realize you are not the only one listening. Others around, others you respect, are actually nodding their heads in agreement with this new acquaintance.

So you’re here on your own and checking in with yourself. You may be a stay-at-home mom, a Fortune 500 executive or a small business owner. You may be someone used to having a spouse with whom you talked about household and personal finances, or someone who has never participated in the management of household expenses, let alone any kind of investment situation. Now you’re facing someone asking you to make a financial decision that can impact your future. Is this scary? Tempting? Many think it is, and rightly so.

How do you respond to this situation?

  • You could say it’s time for another drink and try to slip away
  • Say, “Look over there!” And disapear like they do in the movies
  • Or, you could say, “Let’s talk about it another time after I look over the company materials”
  • Or, you could say, “I’m not ruling it out but would like to talk it over with my team of financial advisors”
  • Another idea is to ask, “What is the expertise you have that makes you so sure this will succeed? What are the materials you looked at to help you form this opinion?”
  • Or, you might pose this question, “What business experience does the founder have? And how successful were her/his previous ventures?”

Do you run and hide? Or do you “attack”? Which is better for you? Only you can decide. However a good part of your decision may be based on how much risk there is and whether or not you can afford to make and lose an investment in a new public or privately owned company.

Today, when everyone knows someone who is developing a “hot” and “amazing” new app … or the next best thing to hit the web … or a product that everyone “must have,” deciding to invest $1,000, $10,000, $100,000, or millions should be based on a sound financial plan developed with your team of financial advisors.

You’ve probably learned this already, this advanced in your divorce recovery: A team of financial advisors is one or more persons who may include your certified public accountant (CPA), certified financial (divorce) planner (CFP or CDFP), attorney, investment advisor at your securities firm, trusted family member, or dear friend with financial experience, etc. Your team, comprised of diverse experts offering varied feedback, can help you evaluate:

  • Your ability to afford an investment
  • The risk of making an investment
  • Comparison of this “can’t miss” investment with traditional investments
  • The short term and long term possibilities regarding this investment and when your investment may be returned and what the cash earnings on the investment may be.

So while it may be very attractive, exciting even to invest with your friends or family just because they are doing so, or because you feel compelled to follow along, you can do the savvy thing. You can respond with a list of questions to ask company management, and you can request and review company financial materials with the help of your financial advisors. You’ve come this far in your divorce recovery, don’t succumb to relinquishing control over your life and your future now. With your team you can put together a plan that not only helps you make sound financial decisions but also shows those around you that they need the same information to make their own smart financial decisions.

Bruce Balsam, CPA, MS is a partner at Elliot Horowitz & Company, LLP a Certified Public Accounting firm located in New York City. As Director of Tax Services he helps clients manage their tax filings and develop financial plans to keep their tax liabilities as low as possible. Clients often ask him and his partners for help starting a new business, evaluating investments and investment opportunities, evaluating insurance needs and planning for future expenses such as college tuition and retirement. In addition Bruce’s firm has professionals and support staff available to help with bill payments and other daily household needs. For your complimentary appointment to review your situation and answer questions, contact Bruce at 212.972.7500, ext 106 or email him.

 

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