Are you considering working with a financial advisor? If so, make sure you ask yourself the following questions:
- Do you have the time to manage your investments?
- Is your personality compatible with personal financial management?
- Do you have sufficient expertise to manage your own portfolio?
These are key questions that many adults need to review from time to time, especially at major life changes or in times of market volatility.
Are You Too Busy to Manage Your Investments?
One of the main reasons why you might not want to manage your own investments is simply because you don’t have enough time. Modern American life can be incredibly time-constrained. The demands of family and work leave less and less time for other pursuits. If you are “Pressed for time” or find that “There is not enough time in the day“, then you may wish to partner with a professional
Do You Have the Right Personality To Be Successful with Your Money?
Stocks, bonds, and real estate form the core of many investment portfolios. As you probably know, stocks can roller coaster up and down. This volatility can induce fear and stress, which can make a person prone to making financial mistakes. At other times stocks and bonds fall into slumber. When these markets are sleeping you may get antsy and wonder if you will ever reach your financial goals. Again, you may be inclined to deviate from your rational investment plan. These are just a few of the emotional situations that affect everyone who invests. If you are not cut out for this, it may be prudent to work with a financial advisor.
Do You Have Investment Expertise?
Finally, what do you really know about investing? Knowledge is quite important in successfully navigating the stormy investment seas. Yes, one can make it simple by just keeping all your money in a bank savings account. If you do that, however, your principal will be protected, but you’d be earning a near-zero rate of return. That’s hardly an investment and you may never achieve your long-term goals. Furthermore, many portfolios may need a mixture of many different types of investments: common and preferred stocks, corporate bonds, cash reserves, real estate investment trusts, and master limited partnerships, to name a few. Some of these, like the latter two, have peculiarities and idiosyncrasies that you need to know about in order to make intelligent decisions.
