To navigate through the world of finance, one should have a financial advisor to help one choose the right product
An individual should start investing keeping in mind their financial goals, risk appetite and age. To navigate through the world of finance, one should have a financial advisor to help them choose the right product.
The world of investment has a plethora of different products to choose from, which raises questions of where to invest, how much to invest, how many products and product categories are needed to diversify one’s portfolio, and what asset allocation strategies one should adopt. All these questions can only be answered by a financial advisor, keeping in mind the investor’s circumstances.
Many investors think that they can handle their finances on their own. However, this is not a good idea, as one should be adequately aware of their finances, the stock market, mutual funds, and so on. It is also important to have a good temperament level so as to take the right decisions. Certain investors blindly invest in the previous year’s winner stocks/mutual funds, but do not know the basics of the game – that the best performing stocks or mutual fund do not provide any guarantee that they will remain at the top forever. It is very important to build a well-balanced portfolio that can withstand volatility and yield good average returns.
Now, you might be wondering, since there is lot of information available on the net, why would you need the guidance of a financial advisor?
Let us suppose that Raj has a list of goals, such as buying a motorbike, taking a holiday with his family of three, and planning for his child’s college education. He should approach a financial advisor so that he can construct a portfolio containing suitable products to reach these specific goals.
Let us understand this in detail: Raj’s plan to fund his child’s education, still ten years away, is his long-term goal. To achieve this goal, he may consider investing in equities. Raj might not know whether to invest in equities or debt. Also, Raj might be struggling to deciding which stock/fund to invest in. This is where the financial advisor comes in, and they will help Raj find solutions to these problems.
Here’s a list of areas where the financial advisor plays an important role:
Building a strong portfolio:
The financial advisor imparts the right guidance regarding investing according to one’s requirements. This helps to construct a strong portfolio which helps in achieving financial goals within set timelines.
The financial advisor has a skillset to study markets and make investing decisions accordingly. They undergo several trainings and certifications to become a financial advisor. This not only helps to maximise returns on your portfolio but also helps in avoiding investment mistakes. A small number of investments in suitable products can make a significant difference than investing in products not suitable to your needs.
Monitoring your portfolio:
As time is always hard-pressed for, investors might not always be able to monitor their portfolios. Monitoring a portfolio involves reassessing the investing performance of the financial product and also ensures that your investments are aligned with your investment goals.
Time-to-time portfolio revival:
A financial advisor may suggest portfolio change recommendations based on the market performance and their expertise.
One should start investing as early as possible to build a wealthy future and enjoy the power of compounding. A financial advisor is recommended to build a financially secured feature.
The author is Co-Founder, Tarrakki
DISCLAIMER: Views expressed are the author’s own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.