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.
Explore the various factors and the advantages and disadvantages to consider before deciding to invest on your own or with a professional.
Investing can be a powerful tool for increasing your wealth and reaching your financial goals. Investment fundamentals are straightforward. Companies and individuals need money to operate, and investors supply these funds by buying shares, earning a portion of the profits in return; this is called equity investment. Alternatively, companies might need loans, and investors put their money into funds that lend out money. These are debt investments, where investors make money off the interest when the loans are paid back, and eventually get their original investment back too.
However, the simplicity in investing ends there. Any seasoned investor will tell you that there are many nuances to investing. One must consider risk, trends, volatility, and many other factors and market dynamics.
Therefore, when you decide to invest, one of the first questions you will ask yourself is whether you should invest on your own or seek help from an expert. Many individuals choose to collaborate with financial advisors to guide their investment decisions. Others opt to manage their investments themselves by researching, carefully studying reports and market trends, and learning to invest through trial and error. Which method is right for you? Like investing, this decision depends on several factors. Let’s explore further.
Your level of financial knowledge
Your financial knowledge is a significant factor that will influence whether you should invest on your own or seek help from a professional. If you have a solid foundation in financial management, understand the advantages and disadvantages of various financial instruments, are comfortable with regularly tracking market trends, and are capable of consistently monitoring the markets, you might be able to effectively manage your own investments. If on the other hand if you lack expertise in these areas and can’t devote the time, energy, and attention to staying updated on market trends or enhance your knowledge, then it would be wise to hire a financial expert to manage your investments.
The time and effort you are willing to put in
Investing isn't just a one-time activity where you buy a stock or bond and wait for earnings. While this may be true for a select few long-term debt investments or bonds, the truth is you must constantly monitor your portfolio, track market trends, and adjust your investments frequently to maximize returns. This process requires considerable time and effort.
If you’re new to investing, you will also need to invest time and effort into learning about the best practices in investing. There’s a reason why there are entire newspapers and news channels dedicated just to the markets and investments – markets are constantly evolving.
When deciding whether you should manage your investments yourself or entrust them in the hands of an expert, consider these key questions:
• Do you have the time to monitor your portfolio and market trends regularly?
• Will you be able to invest effort to monitor and continually learn about investments and new developments?
If the answer is no, then opting to hire an professional with expertise in this area would be beneficial. If you are concerned about the cost of hiring a financial advisor, think about the value of your time and effort, and what other tasks you could focus on.
Cost of investing
What is the value of a good investment to you? You’ve heard of this popular saying “you need to spend money to make money.” The principle holds true for investment advice. Hiring a professional ensures they will work to achieve the best results suited to your needs or guide you towards choices that match your financial objectives.
If you choose to invest on your own, you will save on professional fees, but it requires a substantial commitment of time to educate yourself and monitor your investments. Without expert guidance, you might also miss opportunities for potential higher earnings. In any case, there are costs, and the right decision depends on your circumstances.
Despite understanding the factors for choosing between self-investing and hiring an expert, making the decision may still be challenging. To assist you further, let's examine some pros and cons of each option.
Expert Advice & Strategy
A professional will assess your initial financial position. When you collaborate with an expert, they ensure they have a comprehensive grasp of your financial objectives and risk appetite. This enables them to tailor decisions and deliver a personalized plan to reach your goals. Without professional guidance, you would need to develop your own plan and rely on trial and error or extensive research.
Staying on track
A professional can guide you on the best methods to remain aligned with your financial objectives. They might recommend automated investment strategies or regular performance assessments. If they are managing your portfolio and overseeing your investments, they oversee all these tasks for you, saving you time and effort. On the other hand, keeping your investments on track yourself can be tough. You'll need to use strategies to regularly check how well your portfolio is doing to reach your goals.
Managing risks
When investing, there is always an inherent level of risk. Some risks are worthwhile, but others might be completely avoidable. Managing your own investments might mean you accidentally put money into risky assets, which could result in lower profits or even financial losses. In contrast, a qualified financial advisor uses advanced tools to track your portfolio's performance and therefor can assist you in avoiding unwarranted risks.
With all the pros and cons laid out you’re ready to make a key decision in your investing journey: should you invest on your own or work with an expert?
At Innovation Wealth, we’re here to support you either way. 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. Alternatively, if you’d like some help with investment planning, our team of experts through Aviso Wealth are available to help. Contact us today.
*Mutual funds and other securities are offered through Aviso Wealth, a division of Aviso Financial Inc.
