19 Jul “Why would I need to let an expert handle my finances if I can do it by myself?”
The answer is, you don’t have to!
Or do you….?
The true answer is: it depends!
But depends on what, you might ask?
There are 4 questions that you should ask yourself to make a better decision.
But before that, let us first explore what are the possible scenarios when you work with financial advisers and when you do-it-yourself(DIY) by looking at the pros and cons for each of them.
If You DIY:
|Lower cost, because the only money that you might need to spend is on brokerage fee||You need to spend a lot of time and effort to do your own research on top of your level of knowledge, and there’s a chance that you may still make a mistake|
|You know for sure that you won’t scam yourself (compared to engaging an advisor)||Make your own decisions on platforms, asset classes, strategies and your own financial risk management|
|Can outperform average people if you are really really good at it||There might be a limitation to your research as not everything is available on the internet|
|–||There’s a chance that you might feel confident and knowledgeable because you only have your own opinion to consider|
|–||You need to handle the most important aspect of investing: your own emotions, as you may end up being overly involved in investing and lose sleep over it|
Basically, in order to DIY and achieve great results consistently, you definitely have to possess a substantial level of knowledge as well as the willingness to put in a great amount of time and effort to do so.
You can still sign up for any platforms easily, put in money and buy some stocks with minimal knowledge.
But the outcome will be just be similar to gambling because it is also easy to sign up for MBS membership, put in money for casino entrance and place your money on bets that you have no idea what the results will be.
If You Engage Professionals:
|Way lesser time and effort required to grow your wealth||Definitely higher fees required to pay for the services provided|
|Your finances will be assessed holistically to understand your real budget and risk management||May or may not achieve higher returns than if you DIY|
|Don’t require prior knowledge and don’t require you to do most of the research yourself as the professionals will help you navigate the complex financial situations||Dishonest/incompetent advisors might end up jeopardising your wealth instead|
|You will have a peace of mind as you don’t have to worry about your emotions taking over you as your wealth grows securely||–|
|Have second opinion on your investment decisions outside of his/her suite of products||–|
It is really important to find trustworthy and capable professionals.
Can you imagine only realising that you’ve made a mistake after 30 years?
That’s 30 years worth of compounding time gone that you cannot get back, and now you have a huge hole in your retirement fund.
So then, how should you decide whether you should work with a professional or not?
Below are 4 questions to guide you.
1. Are My Finances Too Complex For Me?
Do you have many goals at different life stages and you want to plan for all of them?
For example, funds for wedding, spouse, children, properties, businesses, retirement etc…
Or perhaps you are dealing with some other complicated situations like inheritance or illness?
Basically, the more you think you can’t handle it, the more you will need to engage a professional, because you wouldn’t want to make an expensive mistake that could have been avoided.
2. What Is Your Level Of Passion And Interest?
You might think that it’s fine, you may not like dealing with numbers but you can handle it whenever you need it.
While that is true, it is also true that it is less likely for you to be actively working on improving your finances because you are taking the avoiding approach.
You might end up missing out on opportunities or even continue to make errors that you don’t realise.
Let’s face it, not everyone is good at dealing with numbers, let alone being passionate about it.
If you cannot tahan numbers and math and finance, then you would be better off not touching it because you will need to spend a lot of time and extra effort on it.
However, if you are passionate about finance and good in numbers, then please, by all means, pick up all the skills and knowledge from these professionals and improve it yourself!
3. Are You Willing To Put In The Time And Effort?
You might have the interest, passion and knowledge to handle your finances.
But your full time job demands you to work from 8am to 12am daily from Mon to Sat, leaving you with just Sunday to spend with your family and friends.
Are you willing to use that precious Sunday to work out your finances instead?
Okay, maybe work is not so extreme for some of you.
But you get the idea.
It’s all about that personal preference in work life balance.
4. How High Are Your Expectations?
If you expect to double your wealth overnight, then perhaps you don’t need a professional, you need luck.
Most capable professionals would likely be able to get you better returns as compared to amateurs, and some could even get you consistent good results.
If you expect a professional to protect and grow your wealth securely and consistently, then this is for you.
The general chain of thought is:
Either you fork out additional money for someone to do it for you, with a possibility of achieving lower returns, but save a ton of time and troubles for yourself.
Potentially losing money to learn through mistakes, despite spending a lot of time and energy, but with a possibility of achieving higher returns in the future.
But my question to you is: WHY NOT BOTH?!
Disclaimer: This post is for your information only and does not constitute any form of financial advice, you may wish to seek advice from a financial consultant before making a commitment to purchase any product.