Guest Post by Jack Reed a financial writer with Oak View Law Group, a law firm specializing in debt settlement services.
Can do-it-yourself investing replace financial advisors
There has been a lot of debate on whether investing is a do-it-yourself job or you need to hire a financial advisor(FA). Many people opine that reading authentic books and online participation in forums can furnish you with sufficient knowledge to manage your personal portfolio. While some people take this as a challenge and enjoy the work, others find that they lack time, enough knowledge and patience which investing demands. So can you deal with index investing yourself or do you need an investment advisor? A wrong choice can lead to huge monetary loss and force you towards debt relief programs like debt settlement. Let's discuss.
Why do a lot of people want to burden themselves with the job? A report by the Investment Company Institute reveals that most investors want absolute control because making investment decisions gives them a sense of empowerment and satisfaction. The report further adds that a large number of people are confident that they are well informed and intelligent enough to manage their investments. Moreover, a lot of people simply enjoy working on their investments. Personal finance has become a very popular hobby, particularly after the advent of internet. So the do-it-yourself investors like to experiment with their investments and conduct financial research. Also, some people just hate financial advisors. They believe that financial advisors are not trustworthy and many of them are incompetent as well. This prejudice may result from either negative reviews about financial advisors or bad experience in the past with them. Finally, many people, particularly the first time investors, might not have enough money to hire a financial advisor or their investment account might not be big enough to hire a FA.
Should you hire a financial advisor? Well, you do have some good reasons to consider it. A financial investor, for sure, will protect you from making common mistakes which reduces the return. Even veteran investors make common mistakes like trading frequently and attempting to time the market. In the U.S.A, people lose as much as 7% annually due to these mistakes. Hiring a financial advisor can save you money by avoiding these strategic errors. A good FP helps you to understand the proper investment choices for high returns. He might widen your investment choices by lending you access to special class of shares and exclusive fund families. A financial advisor will also help you to understand intricate things like estate planning and retirement forecasting as well as manage your portfolio.
Managing your investments may be simple but it is not easy. You need to clearly understand that if you are capable enough of devising a low cost yet effective investment plan then you are smart enough to handle your portfolio. Apart from the monetary factor, there is another issue which should be taken into account. You should be aware of your priorities. If you want to spend more time with your family than you want to on investing then better hire a financial advisor.
Consider all the above points and then decide for yourself whether hiring a financial advisor is the best possible choice for you.