In order to have a comfortable financial future, one needs to have a good financial plan in place. An exhaustive financial plan allows you to be prepared for emergencies, be in better control of your finances, and avoid crises where you run out of funds. However, coming up with a financial plan is not an easy task, which is why it is recommended to seek the assistance of a financial advisor. An advisor can help devise a strategic financial plan that is suited to one’s individual financial ambitions and goals.
Here are 8 reasons why you can benefit from the assistance of a financial advisor while creating your financial plan:
- Setting realistic timelines for your financial goals
- Keeping a tab on your investments
- Reducing the stress involved in financial planning
- Finding and choosing the right investments for your financial needs
- Drafting an infallible estate plan
- Planning your taxes
- Diversifying your portfolio
- Staying on track to achieve your financial goals
As an individual, a lot of our decisions are influenced by societal pressures, our peers or family. This can cause one to make decisions that may not be financially prudent or set unrealistic timelines for oneself regardless of the present state of your finances. For example, you may decide that you want your own home by the time you turn 28. What’s important is that we look at things from an unbiased lens. A financial advisor can help you out by bringing more reason to your choices. These advisors can suggest a suitable time horizon needed to achieve your goals as per your age, income, family composition, etc. This allows you to reach your targets without having to compromise on your short-term or long-term needs and requirements.
Investing money is not a one-time activity wherein you park your money in a stock or bond and forget about it. One needs to monitor their investments to be able to sell or buy units of a particular stock, mutual fund, bond, or equity to take advantage of the market and make a profit on your investment. However, it is not possible to stay up to date with the daily fluctuations in the market on a daily basis. Here’s where a financial advisor can help you and ensure you do not miss out on opportunities. They can look for attractive opportunities for you so that you can invest in the right products at the right time and stay on track to achieve your financial objectives.
Money tends to induce stress in a lot of folks and some people may find it tough to invest their money due to the risk involved in it. In addition, having limited knowledge about the intricate workings of financial instruments, the impact of changes in the law, economic policies, or market cycles can cause one to suffer significant losses. Most investors are not privy to aforesaid information nor are they knowledgeable enough to decipher its impact on their finances or investments. However, a skilled and experienced financial advisor would be able to guide you through such turbulent conditions. Knowing that someone is keeping an eagle eye on your finances can be soothing to you and help lower any unnecessary stress and anxiety on your part.
As an individual investor, certain accounts and funds are not accessible for you to invest in. These funds are only available to certified financial advisors who have the necessary permission to invest in them. A financial advisor can find them and invest on your behalf helping you earn profit and grow your wealth. These exclusive funds can serve as a source of building up significant funds over time and be of great strategic import.
Estate planning involves an exhaustive list of tasks related to an individual’s assets that need to be carried out in the event of his/her death or incapacitation. These tasks comprise several different elements such as making a will, setting up a trust, probate, a health directive, charitable donations, and more. A financial advisor can help you create an appropriate estate plan depending upon the ages and needs of your family members. An estate plan entails synchronization of the names of nominees on the will with individual accounts and policies, such as your pension plan, insurance policy, bank savings account, etc. Moreover, you’ll require the services of a guardian for any minor children or a power of attorney to execute your health directives. There is a chance that you may overlook these details, but a professional would take care to ensure that your estate plan is carried out as per your wishes.
Taxes can eat up your savings in a jiffy leaving your assets, inheritance, and income vulnerable to the state exchequer. You may require the services of a financial advisor to plan your retirement withdrawals in a manner that does not attract penalties and negatively impact your taxable income. In addition, the advisor can help you minimize taxes incurred on capital gains. Finding the right balance can be tricky, which is why it is advised to hire a competent advisor.
It is important to strike the right balance when it comes to risk in your portfolio. To lower the risk factor, most financial advisors recommend diversification that distributes risk across your investments. For example, if you purchase stocks from different industries like real estate or gold, the likelihood of them both reacting to market fluctuations, in the same manner, are quite small. Thus, even if one stock underperforms, the other would make up for any losses incurred by you. Also, you should be wary of the risks of over-diversification, since identifying the right opportunities for your portfolio can be tricky. A financial advisor can help you strike a balance and help you invest in stocks that match your needs and risk appetite.
It is quite easy to become distracted and lose sight of your goal. Increasing responsibilities, rising debts, life events can sometimes come in the way of your dreams and ambitions and play spoilsport. To ensure you don’t stary and stay on track, consider hiring a financial advisor. He will ensure that you remain motivated, advise you on how to best manage your money and investments, help identify the right opportunities for your portfolio, and design strategies that will enable you to stay on track to achieve your goals.
One cannot overstate the importance of a financial advisor while creating a good financial plan. Right from guiding you on your finances to tips on how to save money and invest to helping you mitigate risk, financial advisors can be of invaluable help to you.
If you’re looking further help in managing your finances for a secure financial future, get in touch with top professional financial advisors.