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Should you hire a financial advisor?

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Last Updated: Jun 26, 2020, 09.57 AM IST
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Summary Most individuals are aware of the importance of investing and saving money. However, not many of them know how to do it right. Most investors are not sure about where to invest. They end up making investment decisions that cost them heavily.

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In contrast with the current health emergency, men were at the sharp end when the notorious 2008 global financial crisis sparked the previous global recession.
By Amit Rathi

Most individuals are aware of the importance of investing and saving money. However, not many of them know how to do it right. Most investors are not sure about where to invest. They end up making investment decisions that cost them heavily.

Let us start with investments. What is an investment? Any asset, be it monetary, property, mutual funds, and so on, that generate wealth in the long run can be considered an investment. Investing also needs a long-term vision. As most people are unsure about how to invest, they make speculative investments. Often people end up taking impulsive decisions in the heat of the moment and suffer the consequences.

This is where a financial advisor could help you. The advisors can help you to attain your goals through proper investment strategy.

Faced with too many options, most investors get extremely confused. The key to investing right is to analyze your financial position and the capacity to take riskst. You then need to choose whether to invest a single opiton or opt for a mix of different investments. The second strategy is alwasy better in the long run.

It may sound tricky for an invetor with no basic knowledge about investing. Such people can seek the help of a professional to cut down the risks associated wtih investing in markets.

How does a financial advisor help you to reduce risks? Let us first examine the basic functions of a professional advisor. An advisor helps you make the right investments to make wealth in the long run. In simplest terms, he/she manages your finances on behalf of you and try to minimize your risks in the market and yield better results to reach your desired goals.

A financial advisor helps you in:

*If you reach out to a professional, s/he initially focuses on your capability and goals, and suggest an investment plan accordingly.

*Having analyzed your interests and your capacity to invest, it is easier for the advisor to help you find a mix of investments. A mix of investments are always better than betting on a single investment option. When you you suffer losses in one investment, some other option might be making money for you.

*A professional takes complete care of your complete financial needs, be it your insurance policies, your savings and investments, and creates tax strategies for you.

*They stay in touch with you. This helps them to know your current scenario clearly. Sometimes, your goals tend to change as per situations. Your advisor can update you on your situation and goals.

(Amit Rathi is a Certified financial Planner, based in Kolkata)
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)

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