Investment decisions can often be dependent on experiences, opinions, and even emotions. Some of the most prominent investment decisions are made by people who are simply following specific trends, like panic selling after a news break or investing in real estate because everyone else is doing it. Most of the times, we allow such things to cloud our judgment when it comes to making and managing our investments.
Investment strategies are not generic; not every strategy applies to everybody, and not every investor should follow the same route plan. It is a very personalized activity, and each plan has its own components laid down on the basis of individual factors such as investment horizon, risk appetite, personal life goals, and more. Hence, simply following the herd may not be the best possible strategy when it comes to investing your hard-earned money. You must seek advice from experts who can help you chart out a good investment plan that suits your personality and can take care of your needs, making room for money for when you need it, like milestones.
Another important aspect of investing is knowledge. While making your investment strategies, and to make sure you place all of your investments correctly, having a proper understanding of the instruments, businesses, economy, and even global factors that such investments are exposed to, is crucial. This is not an easy task, and you may not be able to follow more than one or two sectors thoroughly enough to make sound investment portfolios. Hence, it is essential to take a piece of good financial advice for you to invest correctly. Here are some reasons why seeking financial advice is important:
1. Understanding Your Goals
The first and foremost aspect of drawing up an investment strategy starts with your own life goals. A financial advisor will ascertain your personality, how much is your appetite for taking risks, the kind of goals you have or should set for yourself – both short-term and long-term – and the amount of money you should invest and so forth. They will break down your future plans into systematic approaches and will suggest the best possible ways to meet them via smart investment plans.
2. Capitalizing on Experts
You can either look to manage your own portfolio, do you own research, and make your own mix of equity and debt securities. Or, you can allow all of this to be done by a team of experts who have extensive knowledge of the economy, the various sectors, businesses, and even other global factors affecting them. The choice seems to be simple, doesn’t it? Eric Gordon states ‘the average investor cannot outperform a team of veterans in the long term.’ It is always wise to trust the guys, who spend all of their days researching markets, with your money than yourself.
3. Diversify your Holdings
With investment comes risk, and that’s where all smart investment plans ensure that your money is put into diversified avenues. In simple words, it means hedging. A good financial advisor will always tell you to diversify your portfolio no matter how strong your gut for a particular sector may be. This is because you must not depend upon just one source, or a small set of sources, for your returns. Financial advisors help you diversify your portfolio so that you can take advantage of national and international growth factors that favor not just one but many sectors. For instance, a breakthrough in wireless technology will not only positively impact the IT sector; it will positively impact the Telecom sector too. This is how you reap multifold benefits. Likewise, putting all your savings into real estate may not be the best form of investment.
4. Un-follow, the Herd
Every now and then, you may come across a particular trend in terms of investment activity like a real estate boom or a tremendous buying in the IT firms, etc. While all of the commotion and buzz may pose itself like a decent opportunity to jump in and grab a piece of the pie. However, most of the times, the opportunity is mostly saturated and a mere exaggerated sentiment. Instead, good advisors will help you look for such opportunities that are worthy of a first-movers-advantage.