Do you really need a Financial Advisor?

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If you do your own investing, have you ever wondered whether you should turn things over to a professional advisory? This article attempts to shed some light on this topic and provide you with some things to think about so you can make the best decision.

Professional financial advisers carry out a ‘fact find’ where they ask you detailed questions about your circumstances, your goals and how you feel about taking risks with your money. Then they recommend financial products that are suitable and affordable for you.

Types of financial adviser

Financial advisers offer services ranging from general financial planning and investment advice, to more specialist advice, such as the suitability of a particular product such as a pension.

In the case of investment products, some advisers are ‘independent’ – meaning they offer advice on the full range of investment products from the market, while others offer a ‘restricted’ service meaning that the range of products or providers they will look at is limited.

What are the benefits of getting advice?

If you buy based on financial advice and a recommendation, you should get a product that meets your needs and is suitable for your particular circumstances.

Depending on the type of adviser you use, you might also have access to a wider range of choices than you’d be able to assess realistically on your own

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You make Like : Why Retirement / Pension is important in financial planning?

When The Time comes 

Professional Advisor Say there is no magic numbers that pushes the investor to seek advice.

Rather, it is more likely an event that spooks a person and sends him scurrying through an advisor's door. The event could be something that requires the individual to manage an asset himself.

According to Charles Hughes, a certified financial planner in Bayshore, N.Y., the event typically involves either the receipt of or access to a large sum of money that the individual didn't have before.

Judge yourself

It is important to have a self-evaluation when you are deciding whether you need a Financial Advisor or not.

So you really need to do your homework.

Ask yourself these questions:

• Can you afford to lose any money?

• Do you have the time to do the research?

• Do you have much experience, knowledge or skills when it comes to investing?

•If things go wrong, are you comfortable taking responsibility for any bad investing decisions?

If the answer to any of these is ‘No’ then seeking financial advice might be your best option.

When trying to decide, also bear in mind the cost of fees against the financial and emotional cost of getting it wrong if you buy without advice.

Financial Milestone for a 25 Year Old Woman.

When you turn 25 this year (next month, in fact!). 25 - a quarter century, does feel like a milestone, and makes you ponder over “And that got you thinking, how important is it really to be aligned to your age-goals?

When I turned 21, my 25-year old goals were: to be independent, and justify the costs of my education. I feel I have achieved both. But considering, how our goals evolve with time and age, one has to wonder how difficult or easy it would be to achieve the goals of 35-year-self?

Being married with kids, or having traveled to at least 7 new countries, or becoming a VP of a company, could be the goals of my 35-year old self. But how do you achieve these, so that when you turn 35, So that you don’t back at my 20s with regrets…?

Learn to negotiate. This goes for everyone but especially for women since women are 2.5 times more likely to have a “great deal of apprehension” about negotiations. According to Linda Babcock and Sara Laschever, authors of Women Don’t Ask, failing to negotiate your first salary and starting your career at just $4000 less in salary can result in a career income loss of over $500,000 by age 60. Since men are four times as likely as women to negotiate their first salary, this may have a major impact on the salary gender gap. It may actually be a “negotiation gap” rather than a gender gap in income. Taking that knowledge into face-to-face negotiations with your employer or prospective employers can have a significant impact on your finances.

Are you finding difficulty in managing the personal Finance?

We at Moneymindz.com will make it easy for you. Just give us a missed call on 022-62116588 to explore our India’s best Free Advisory Service.

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Start out saving a higher percentage of your income. The difference between saving 10% of your income (which is the rule of thumb) and 20% of your income is significant over your lifetime. A 25 year old who makes $50,000 a year and saved 10% of income would have over $800K at age 65 if they earned 6%. That doubles to over $1.6 million when you save 20% and right out of college is the best time to do that since you are used to living on the cheap. Recent graduates today are saddled with student loan debt, which does make this more of a challenge but that said, starting early and committing to saving a high percentage of income is a sure wealth builder.

Marry someone you deeply love and stay married. Obviously no one goes into a marriage planning on getting a divorce but nearly 50% of marriages end in divorce. Divorce has an extremely negative impact on finances. Just the legal cost of a divorce itself runs about $20,000 per couple, which instead could have grown to just over $64k in retirement savings if invested at 6% over 20 years instead.

There are other hidden costs. Splitting assets may have tax implications with an investment sale triggering capital gains taxes. Selling property may also result in a “fire sale” at an inopportune time in order to dissolve the financial union, resulting in thousands of dollars in losses. When the going gets tough in a marriage, I would like to tell my twenty year old self that 86% of married couples who reported being unhappy in their marriage reported that things had improved within a few years. Though this is not true for all marriages and some couples aren’t meant to be together, being happily married can be a great boost to your financial health.

Invest in real property. Buying real estate can be an excellent long-term investment if you don’t mind being a landlord and you have six months of a mortgage payment lined up as a back-up plan to make the payment when tenants move out. The beauty of investing in real estate is the tenants make the payment over the years and when your property is free and clear, you have an income stream for life. One strategy is to buy your first home with the intention that you will turn it into a rental property when you’ve saved enough for your next down payment. You can also exchange properties using a 1031 tax free exchange to either trade up or to purchase like kind property in a better location – such as a resort property you rent to tourists and then can use two weeks a year yourself.

PRACTICAL STEPS TO CLEAR FINANCIAL DEBTS

Being in debt is stressful, any day. Taking more debts to pay off previous debts makes it even difficult to escape the vicious debt cycle. If you are burdened with debts, it’s not just you. 

In most cases, debts result from untimely borrowing, non committed expenses, and wrong investment choices. On the whole, improper financial planning plays the culprit.

Factors like commitment, planning, and funding are essential to come out of the debt cycle. Read through this Moneymindz post to come up with a plan that includes simple yet practical steps towards paying off debts.

1. Come Up With Alternative Income Sources

Look for more income sources to meet your money needs, but not through loans. Do not attempt to borrow any more money to fund lifestyle.

If you can afford time and energy, pick up a part-time job, earn some extra cash to meet the requirement. You may also ask other capable family members to earn a little extra through part-time jobs. Use this extra income towards living and clearing your debts.

Are you finding difficulty in managing the personal Finance?

We at Moneymindz.com will make it easy for you. Just give us a missed call on 022-62116588 to explore our India’s best Free Advisory Service.

MONEYMINDZ DO NOT SELL ANY FINANCIAL PRODUCTS, WE ONLY PROVIDE UNBIASED, FREE, ON PHONE FINANCIAL ASSISTANCE

2. Evaluate Your Spending Choices, Stick To The budget

Debts consistently make us fall short every month, leading to borrowing. *Around 58% people find it difficult to meet monthly expenses on time and 70% either don’t plan and budget or cannot stick to the planned budget.

So, it becomes necessary to budget out and cut down on spending. Evaluate routine habits to understand pitfalls. It makes sense to keep an eye on daily expenses and go for worthy purchases. Spend only on essentials and basics required for survival. In simple, measure and track your income vs expenses figures. Curb expenses with reasoning.

3. Change Your Lifestyle to Fit In Current Situation

Have a thorough understanding of your current phase of life and manage your finances accordingly. Continuing your bachelor lifestyle doesn’t work if you are married or set for family expansion. After all, you cannot play with the security of your dependent.

Ditching your unwanted expensive habits, which stand between you and your financial goals, help. Such habits even add to your debts or make you disable in paying off. Your focus should solely be on clearing current debts. Block your maxed out credit cards. No signing up for new credit cards, no financing for furniture, nothing for which you do not have cash to pay.

Also, consider regular habits like a daily latte, restaurant lunches during work hours, or fast food, which burns your pocket. Your plan of attack should begin with eliminating unnecessary money behaviors. Try replacing them with less expensive measures, if some of them are unavoidable.

4. Organize Debts and Pay More Than Minimum

Develop a game plan to quickly clear debts by organizing them. Irrespective of the interest rates, list out your debts from smallest to largest. Start with clearing out the smallest ones first, within a time frame, by paying some, every month. Sticking to a plan makes it easy to get out of debts

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Make more than minimum monthly payments to pay off debts sooner and lessen your interest burden. *Nearly, 50% of us prefer to pay out minimum amount credit balance. This doesn’t help as you end up paying a high-interest amount and even slowing the payoff process.

Remember to start with paying off the bad debts first. Bad debts are those incurred to make purchases that quickly lose their value and has no potential to generate income. They usually come with the high-interest rates.

Example: Credit card loans. Good debts are those with low-interest rates and with a potential to generate income over time. For example, with a student loan, your education increases your value as an employee and amplifies your worth.

5. Get In A Complete Financial Plan to Avoid Future Debts

Create a complete financial plan after considering your current status of income, expenses, debts and assets. Make right investment choices to avoid any chance of debts in the future. Do not pump in money into bad investments.

Also, plan to avoid liquidity crunch to ensure that you do not get into a situation where you have to borrow money during an emergency.

To conclude, financial discipline and good planning are essential for enjoying debt-free life. Simultaneously, planning for other money needs help avoid possible future debts.

Approach an expert for an end-to-end solution to build and analyze your current financial state, besides measuring progress towards future goals! Online fiduciary-like Moneymindz offers holistic advice and helps create a personalized financial plan. Get it today!