The way you visit a doctor for solutions to your health related issues, a financial advisor is an expert who can help you with your financial goals and wealth creation journey. The financial need and aspiration of no two individuals is the same. So, there is no one size fits all approach available when it comes to achieving financial goals or financial freedom.
Most often investors have surplus money but are not aware of investment avenues. At such times a lay investor can consider investing lumpsum in multi-asset or dynamic asset allocation or balanced advantage category of schemes wherein the investment amount is spread across different asset classes. However, what is most required is to invest as per one’s asset allocation. For deciding on asset allocation, several parameters such as an investor’s risk taking ability, nature of financial goals, age of the investor and tenure of investments are taken into consideration. Basis these, investment avenues are selected for each of the goals. In order to do this well, it is best to approach a financial advisor.
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There exists another class of investor who may have invested but don’t have time to keep track of their investments and take necessary, timely actions to keep their financial planning on track. Here too what is required is the guidance and oversight of an advisor. The role of an advisor here is to help chart a plan and keep the investments on track to meet their respective objectives. Therefore, the role of a financial advisor is of great relevance. They not only manage investors' assets but also their behavioural aspects such as greed and fear through continuous hand holding and educating them along the course of their investment. Since the investment journey spans across decades, building trust-based relationship between an advisor and investor is extremely important.
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It is often seen that investors prefer lump sum investments. The only catch here is that such an approach may not be right all the time. Depending on the market conditions, an advisor is well equipped to help an investor to stagger deployment of funds. During times when market valuation is attractive/cheap, an advisor would prefer to take a call for lump sum investment as significant wealth can be created when sizeable purchases are made at lower valuations. All of this may not be possible for a lay investor without a helping hand.
Furthermore, when investments turn into red, it is quite a frustrating experience for investors. This may lead them to take some wrong investment decisions in the form of either redeeming money at a loss or stopping fresh investments. Such random actions can throw the entire financial planning in jeopardy. At such times an advisor’s role of reminding investor why that investment was made will help curtail randomness.
At a time when the road ahead is shrouded with uncertainty, the optimal approach is to park funds in a liquid fund and over time use STP to invest into a desired equity fund in a staggered manner. However, there will be times when having liquidity in hand may not be an effective approach, especially in a bull market. Though SIP and STP are indeed powerful tools which offer solutions to investors, at times relying solely on them may not yield the best possible returns. It is here that advisor’s play an active role by offering tactical investment strategies from short to medium-term perspective in order to help investors make the most of the market conditions. But this requires being well versed with latest trends and market conditions. Here experience from past market cycles can come in very handy. A seasoned advisor, having seen the past market cycles, who is well-versed with the latest market trends, available products and keeps investors' interest first, has all the ammunition to take care of his investors' wealth creation journey.
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To conclude, if you are an investor who is unsure about how to invest to meet your goals then it is better to seek the help of a financial advisor. Their presence will ensure that reach your financial destination with ease and peace of mind.
