Why You Must Seek Help from an Investment Advisor for Successful Investing | Spring Money

Do you know what are the two most important things in investing?

Most of you would have guessed the first one, “Savings” but isn’t it more of an obvious thing?

Can you make a buy without spending money? No, right! similarly saving is like a basic requirement, but what often gets neglected is a piece of advice from an expert, or precisely from RIA(registered investment advisor).

We don’t hesitate to see a doctor when we’re sick and don’t think twice about towing our broken-down vehicle to a mechanic, then why do we seek investment advice from our friends and relatives when it’s about our hard-earned money? In this blog, we will discuss the role of a financial advisor and why it’s a better decision to consult one before investing.

Who is a Financial Advisor?

A lot of people have the wrong misconception about investment advisors and often consider mutual fund distributors, stockbrokers, or policy sellers as investment advisors. In layman’s terms, an investment advisor is a professional with knowledge of finance, who provides advice or guidance to clients regarding personal finance and investments. They can guide you with all your finance-related matters such as investment options, when is the best time to invest, and which investments will be more profitable for you. Such professionals will also help you with tax planning, and buying suitable insurance policies which is a crucial part of our financial journey but most of us don’t realize.

But that’s not all, such professionals whether working on their own or on behalf of any organization and engaged in providing investment advice to clients or anyone else are bound to get themselves registered as an Investment Advisor (RIA) with the Securities and Exchange Board of India (SEBI).

And you’ll be amazed to know that there are just around 1300 SEBI-registered investment advisors in India. Thinking how come so many of them pitched to you, or you meet them so easily? Well chances are few, or even most of them were not registered with SEBI as investment advisors.

Next time you come across any investment advisor, which might be a matter of luck, or anyone trying to pitch you, ask them their registration number, and here you can check their authenticity on sebi.gov.in

Top 7 Reasons Why You must Consult an Investment Advisor while Investing?

In today’s era, there are so many investment options available in the market and it can be overwhelming to decide where to put your money. Also, investing isn't as simple as your uncle described it to you while blending his drink on a family night out. Investing requires knowledge, research, and most importantly, time. This is where the help of an expert can come in handy.

Below are a few most important factors considering which you must take the help of an investment advisor while investing;

1. Financial Goal Setting:

”An Investor without Investment Objectives is like a Traveller without A Destination” The above quote from Ralph Seger would have made you realize what I am talking about. This might sound lame but trust me most people don’t decide their goals and rush to plan their savings and investing, and lastly either they could not continue their investing journey or fail to achieve their goals in an appropriate manner.

For example, is it possible to follow the same investment strategy, if someone is planning a retirement and other is planning to buy a car? Obviously not! The investment advisor first helps you in deciding your goals, both short & long-term, and then keeping your goals in mind things like your earnings, liabilities, and expenses are evaluated to plan an effective investment route.

2. Expertise and Experience:

Having a basic knowledge of finance or being familiar with terminologies used in the financial sector isn’t enough to take control of your investments by yourself. In fact, those are a few things that everyone must know and understand, irrespective of their age and profession, and this is what Spring Money is all about. Investment advisors have years of experience in the market, and they study the trends and patterns of the market periodically. Through their analysis, they can anticipate how different asset classes and industries would perform in the coming years. They can help you make informed decisions about your investments, which can increase your chances of success. Also, investment advisors have knowledge about various investment options, such as stocks, bonds, and mutual funds, and can guide you on which one is the best for you based on your financial goals.

3. Time-saving:

Investing demands a lot of research, analysis, and monitoring. With a full-time job or business and with other responsibilities it’s nearly impossible for us to devote the time required to get the best from our investments. Under such conditions, an investment advisor can save you time by doing the research and analysis for you. They can keep an eye on the market and ask you to do adjustments to your portfolio when necessary.

4. Risk management:

Investing with zero risk isn’t an option at all. If someone is telling you that, don’t fall for it, it’s a trap, you pick any asset class or any industry, risk and investments go parallel to each other.

The only option we have is to manage our risks by adjusting the distance between these parallel lines as per our reward expectations and risk-taking ability.

An investment advisor can help you manage risk by creating a well-diversified portfolio. They can help you spread your investments across different sectors, industries, and asset classes, which can reduce your overall risk.

5. Tax Planning:

You will come across taxes on various income sources such as your salary or the rent from a property you purchased or even the mutual funds you sold and many others. Strategizing about ways to reduce such taxes can significantly increase your savings. But similar to investing, tax is a broad topic and a tough nut to crack for us, because every now and then there are changes happening in policies, that again demand time and effort to understand. A financial advisor would plan your investments in a way that could help you lower your tax liabilities.

6. Debt Management:

Consumer debt in India is approximately $441 billion, many want to get rid of their debts but due to mismanagement of finances, they don’t know how to do it.

A financial advisor can help you create a budget considering your income and expenses and identify areas where you can cut back your spending to increase money flow towards your debt. An advisor could also create a plan to pay off the debts with the highest interest rate first, or consolidate your debts into one with lower interest.

7. Peace of mind:

Apart from being time-consuming, investing can also be stressful, especially if you are new to it. An investment advisor can provide you with peace of mind by taking the burden of managing your investments off your shoulders. They can answer all your queries and provide you with regular updates on the performance of your portfolio. This can help you feel more confident about your investments and focus on other aspects of your life.

8. Prepare for Unpredictable Transitions in Life:

Life is unpredictable, and it is extremely important to protect yourself and your loved ones. A financial advisor would suggest you the best health and life insurance policies that would help you not just protect you and your family, but also your savings and investments. For example, if you or someone from your family require a medical emergency the health insurance policy will help you cover a part or even the entire expenses. This provides you with the advantage to get the best treatment without draining down your savings. Similarly, the life insurance policy would cover your family in your absence so that other investments don’t get disrupted due to their needs.

Conclusion:

Investing is the second most important thing for building wealth after saving. However, it is extremely overwhelming and time-consuming. The help of an investment advisor can provide you with numerous benefits and help your investments thrive with time.

So if you are considering investing, consider taking the help of an advisor. It would definitely be one of the best decisions you make for your financial future.