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When you first have a little bit of money to spare it’s quite easy to feel overwhelmed knowing what to do with it.
There are so many options open to a new investor. Should you buy real estate? Should you invest in stocks and shares? What about locking it into a high-interest savings account?
Paying for financial advice feels contrary to do-it-yourself (DIY) investing, but there are some circumstances where it could help you to maximize your financial opportunities.
If you’re scratching your head and wondering, “Should I use a financial advisor or do it myself?”, check out these top questions you need to ask yourself before you make this important decision.
8 Things to Consider When You Ask: “Should I Use a Financial Advisor or Do It Myself?”
Depending on your time, experience, and the amount you have to invest, there are several things to think about before putting your spare money anywhere.
#1. Have You Ever Invested Before?
Brand-new investors are wise to seek out financial advice. That could mean sourcing reliable information on the internet or hiring a financial advisor.
New investors may not know about the full options open to them, which is where an advisor could help you to decide.
However, if you want long-term investment success then it is often worth learning as much as you can about doing it yourself from the start. A financial advisor is a one-off fee – but when you rely on them, it will become a recurring expense as your portfolio evolves over time.
#2. Do You Know How to Manage Exchange Fees?
When investing in stocks and shares it’s easy to assume you just buy the shares that you want and that’s it.
In fact, the buying and selling process can be quite complex. In addition, there are different broker account types and fees associated with them.
For example, some brokers will offer a percentage commission cost on each trade. Others may have a set flat fee per trade: it all depends on how many transactions you plan to make every month.
Hiring a financial advisor will help new investors understand which option is best for their portfolio choices. However, this is also information you can find from reliable online resources if you have the time to do the research yourself.
#3. Can You Afford to Lose?
Investing goes two ways, but some choices are riskier than others. Can you afford to lose your entire investment? If so, that opens you up to more risky opportunities that provide potentially larger returns.
If you’re a more cautious new investor or you want a long-term plan to build your retirement savings, a financial advisor could help to demonstrate which investments would suit your portfolio.
For example, it might be more profitable for you to take on a long-term real estate investment instead of a risky shares portfolio. An advisor will be able to identify the risks and benefits of each investment option on your behalf.
#4. Do You Want Protection Against Poor Investments?
There is one main risk of DIY investments: you don’t have any protection against bad choices.
Even if you’ve researched something for weeks and weeks if it proves to be a poor investment you can’t blame the internet!
A financial advisor, however, offers some protection against poor investments. That doesn’t mean that if you lose everything on the stock market it’s always their fault! However, if an advisor has provided improper advice that resulted in financial loss, you do have some legal comeback.
#5. Do You Have Time for Research?
Looking into your investment options takes a lot of time. It doesn’t matter if you have $100 or $100,000 to put into your portfolio: the research you do needs to be thorough.
Gut-reaction investments are ill-advised. You need to balance the pros and cons of different investment types, and your short- and long-term goals.
If you don’t have time to look into every different type of investment for your portfolio, consider the services of a financial advisor.
If you do have time, however, you can save a lot of money by spending your spare time researching opportunities in depth.
#6. Can You Access Free Advice via Your Employer?
Your employer may offer free financial advice for some types of investment. For example, pension plans or salary schemes that offer tax relief on investments could be covered by your company’s benefits provider.
Ask your HR department if there are any independent advisors available for employees. It might be that someone on staff is able to advise on the best way to maximize the tax relief and investments of your employee benefits and retirement schemes.
If your employer doesn’t have an advice scheme, don’t panic. There are many ways to research these employment investment opportunities yourself – it just takes a bit longer than hiring an advisor to help.
#7. Do You Suddenly Have a Large Amount to Invest?
If you’ve been regularly investing small amounts each month on the stock market you may think you’re ready to make a big risk on your portfolio.
Suddenly having a lot of money in your hands, from a business opportunity, an inheritance, or even an employment bonus, is exciting. That doesn’t mean it’s time to make quick decisions on what to do with it, though!
A large lump sum may be more suitable for a different investment route than you’ve previously used. The key to investment success is diversification, so now’s the time to consider using a financial advisor to discover how else you can spread your portfolio.
#8. Have You Considered Robo-Advisors?
The latest in smart investing, a robo-advisor is the happy medium between a real-life financial advisor and the full do-it-yourself option.
Different robo-advisors have a range of purposes. Some will automatically sweep from your savings account to invest in a chosen range of stocks. Others are more hands-on with detailed investing advice.
There are plenty of websites available where you can read more about robo-investing and how this could be the best way for new investors to start making money.
Learn How to Make Savvy Investments Online
Are you still asking yourself, “Should I use a financial advisor or do it myself?”. There are some reasons to use a financial advisor – but there are many more to try small DIY investments first to save (and make!) some money.
Before you decide whether an advisor is suitable for your investment requirements, do some of your own research first. You’ll discover plenty of ways to make money online with DIY investment choices!
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