Should I invest on my own or work with an expert?

Discover the various factors as well as pros and cons to consider before deciding to invest on your own or with an expert.

Thinking of investing? That’s a great decision.

If you go about it the right way, investing can help you grow your wealth. Not just that, it can even help you achieve all of your financial goals. The basic concepts of investing are simple. Individuals and firms need funds to run a business. Investors provide these funds as equity investments and in return, they are given a share of the profits. These types of investments are called equity investments. Or people and firms need loans so people invest in a fund that gives out loans. These types of investments are called debt investments. When the loans are paid back, the investors earn on the interest. After a certain period, they get their initial funds back as well. That’s where the simplicity ends. Ask anyone who invests and they will tell you that there are many nuances to investing. One has to think about risk, trends, volatility, and many other factors and market forces.

Obviously then, when you decide to invest, one of the first questions that would likely pop into your mind is whether you should invest on your own or take help from an expert. Many people appoint experts, usually referred to as financial advisors, to help them make their investments. Others take it upon themselves, reading up on investing, carefully studying reports and market trends, and learning to invest wisely through trial and error. Which approach would be the best approach for you? Like investing, this decision depends on several factors too. Let’s investigate them one by one.

Your level of financial knowledge

This is the major deciding factor that will determine whether you should invest on your own or take help from an expert. If you have a solid grounding in the best practices of financial management, are aware of the pros and cons of various financial instruments, are comfortable with constantly keeping an eye on market trends, are capable of always monitoring market forces, then you may be able to make smart investments with ease. If, on the other hand, you are not well-versed with these and won’t be able to devote time, energy, and attention to keeping up with market trends or increasing your knowledge, then it would be far better to hire a financial or investment expert to make your investments for you.

The time and effort you are willing to put in

You may think that investing is a one-time activity. Invest in a fund or stock or security, and that’s it. You can just sit back and rake in your earnings. While this may be true for a select few long-term debt investments or bonds, the reality is far from it. If you really want to get returns on your investment, you need to consistently monitor your portfolio. You need to look at the market trends and investment performance and regularly switch, increase or decrease your investments. It can take up a lot of time and effort. If you’re new to investing, you will also have to put in time and effort into learning all about the best practices in investing. There is a reason there are entire newspapers and news channels dedicated just to the markets and investments - it’s always evolving and changing. To be a smart investor then, you will need to be in the know and tuned in or put yourself at risk of losing your hard-earned money. So, when it comes to deciding whether you should manage your investments yourself or put them in the hands of an expert, then consider these key questions: Do you have the time to monitor your portfolio and market trends regularly? Will you be able to put in not just the effort to monitor but also to consistently learn about investments and all the new developments? If the answer is no, then go with an expert whose job it is to do all these things for you. If you’re worried about the cost of hiring a financial advisor or expert, think about how much your own time and effort is worth, and what you could put them to better use doing instead.

Cost of investing

How much is a good investment worth to you? You’ve probably heard of this popular saying in business circles, “you need to spend money to make money”. The principle is the same when it comes to spending on investment advice or portfolio management as well. When you pay an expert to handle your investments, you can be sure that they will try their hardest to give you the best returns possible based on your personal profile. Or, if you’re going to them for advice, they will be able to guide you to make a suitable choice to help you achieve your goals.

However, if you decide to invest on your own, you will save the cost of professional fees that you will have to pay an investment expert or financial advisor. But, the money you save does come at a cost. As we’ve already covered above, you will have to dedicate time and energy towards learning about investments, monitoring trends, gaining insights, and selecting the right investments for yourself. You may also lose out on the higher earnings you could have enjoyed with the help of an expert’s advice if the investments you make on your own do not perform as well as you would have liked. Ultimately, you will have to incur some kind of cost whether you decide to invest on your own or work with an expert. Of course, which will be the lower cost and better choice depends on the factors listed above.

Even though you now know about the factors to consider when deciding whether to invest on your own or work with an expert, it still isn’t an easy decision to make. To help you further, let’s look at some of the pros and cons of investing on your own or taking the help of a financial advisor or investment expert.

Expert Advice & Strategy

An expert will know where you are starting from. When you invest with an expert, they will have a thorough understanding of your financial goals and risk tolerance. This will help them to make decisions accordingly and provide you with a suitable customized strategy. Without an expert, you will have to create your own strategy from scratch and will also have to learn by trial and error or tons of independent research.

Staying on track

An expert will be able to provide you with the best ways to stay on track. Perhaps they suggest automated investment plans or monthly performance reviews. If they have been hired to manage your portfolio and monitor your investments, then they will do so for you. You don’t need to spend time and energy doing any of that. On the other hand, if you have to manage all your investments yourself, it may be difficult to stay on track. You would have to make sure you implement the right methods to review your portfolio performance to ensure you can achieve your financial goals. You may also need to set up a dedicated time to spend on monitoring your investments to make sure you take timely decisions.

Managing risks

While investing, you always assume some level of risk. However, there are some risks that are worth taking, while some may be entirely unnecessary. If you are investing on your own, you may end up investing in some risky assets. As a result, you will find that the returns may not be so high. You may even end up losing money. However, an expert will be able to use proper tools to track the performance of your portfolio and help you to avoid unnecessary risks while investing.

Now that you have all the pros and cons that you should consider, as well as your own personal capabilities and preferences, you should be able to make one of the most important decisions in your investing journey - whether you should invest on your own or work with an expert.

Either way, at Innovation Wealth we can help. If you decide to invest on your own, you can make use of various planning tools and calculators to help make investing by yourself a little easier. Or, if you’d like some help with investment planning, you can speak to our Wealth Management Specialists or our Financial Planning Specialists. Invest wisely!

*Mutual funds and other securities are offered through Aviso Wealth, a division of Aviso Financial Inc.

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