Have you ever noticed the corollary between the financial advisor you consult and the advice you receive? Stock brokers like to advise a collection of large cap stocks. Insurance salesman want to show you the life insurance policy that builds up cash values. Commissioned mutual fund salesman have their set of loaded mutual funds. Different products have strengths and weaknesses. It is important to find the one suited to your account.

A hospital employee might buy a 4-wheel drive to insure their arrival when needed. A soccer Mom might buy a mini-van to carry lots of children and equipment. And men in mid-life crisis might buy red sports cars for some strange reason. But it is the needs of the consumer that should determine the right vehicle. Similarly, your needs should be the driving force behind where you invest. Each investor’s situation is unique. There are significant advantages to using different investment vehicles in different types of accounts. A fee-only financial advisor who can objectively advise you on all investment options can put you in the driver’s seat with the investment vehicles most appropriate to your needs.

An investment vehicle is the method by which you invest your assets. Each vehicle has different costs, and like cars, some are more appropriate than others. You can choose to use individual stocks or a stock mutual fund. You can decide to use a cash value life insurance product or a loaded mutual fund. You can buy an exchange traded bond fund or purchase individual bonds. Discerning which is most appropriate for you, and why, is the objective of this three part series.

Investment needs can be divided into nine different categories that apply to everyone. First, there are three different types of accounts: Taxable (where dividends are taxable but capital gains are not, until sold), Retirement (where deposits avoid being taxed because they were not reported as income, but withdrawals are fully taxable), and Roth (where deposits are taxable because they have been reported as income but all withdrawals are tax free). Then within each of these three categories, investment vehicles should differ based on the following three account sizes: 1) small amounts, less than about 300,000 and 2) medium amounts, 300,000 to about a million and 3) large amounts, over a million. Though not discussed in this series, individual investors may also have needs based on their tax bracket, stage of life, cash flow requirements and other issues.

The suitability of many of your investments choices can usually be judged by looking at five factors: expense ratios, transaction costs, diversification, capital gains, and turnover. The next two weeks I will explain each of these five factors. Once understood, you will know what to look for in a stock, bond, mutual fund and various other securities so that your purchases will be more likely to represent your best interests rather than someone else’s.

There is an art to selecting the right investment vehicles for individual portfolios. A good investment advisor will tailor the investments to the specific characteristics of the investor’s situation. One of the best ways of finding such an investor is to visit the National Association of Personal Financial Advisors (http://www.napfa.org) to find a fee-only advisor in your area.